Modern monetary systems

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Monograph

Identifikator:: 1753210836

URN:: urn:nbn:de:zbw-retromon-128414

Document type:: Monograph

Author:: Nogaro, Bertrand http://d-nb.info/gnd/117039713

Title:: Modern monetary systems

Place of publication:: London

Publisher:: King

Year of publication:: 1927

Scope:: XII, 236 S.

Digitisation:: 2021

Collection:: Economics Books

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Document type:: Monograph

Structure type:: Chapter

Title:: Part II. The explanation of contemporary monetary phenomena and currency theory

Collection:: Economics Books

THE THEORY OF EXCHANGE 147 In most recent cases of depreciation the chief objective factor in exchange fluctuations appears to have been the ratio between foreign debts and credits, or, in other words, the balance of payments, fluctuations in the volume of currency being capable, when they are very marked, and particularly when they take the form of expansion, of affecting the balance of trade in a manner which must be considered in the light of each particular case. ~ On the other hand, it seems that these fluctuations should be disregarded when they are not very marked, and when it is uncertain, in cases of deflation, in what sense their objective influence makes itself felt, deflation being always a factor which is likely to have a subjective influence in restoring the exchange on ‘account of the whole complex of favourable conditions which it may herald, such as the firm intention to improve the general financial position, the prospect of a return to a convertible currency and on account of the favourable psychological effect these cir- cumstances may have on the exchange market. It should be observed, however, that while the state of foreign debts and credits is always a factor of first import- ance in an irregular exchange, the amount of such credits and debts which can be immediately mobilised itself depends to a great extent on the whole set of factors which affect specu- lation ; capital belonging to foreign speculators may be lent, left on deposit or withdrawn according to circum- stances. Similarly, capital of every kind may be sent abroad ; this happens, particularly in cases of panic, when in circumstances of prolonged and increasing depreciation foreign bills are bought solely in order to convert savings in an unstable currency into a stable one. This process, which creates a quite abnormal demand for foreign drafts, is capable of radically destroying the equilibrium of the balance of payments. Finally, it is not clear, at this stage, that exchanges which have once moved outside the limits normally set by the possibility of converting the internal currency into exportable currency without loss are thereafter restricted by any limits whatever in their movements.

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