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

158 MODERN MONETARY SYSTEMS tant to leave the volume of currency at a point which corresponds to the level of prices which has been reached, and avoid new issues of currency which might indirectly compromise stabilisation. With regard to the purchasing power parity, we believe that it should also be taken into consideration, not as a means of stabilisation, but as a circumstance favourable to stabilis- ation. For supposing that in attempting to stabilise the sterling-franc exchange when francs are 80 to the pound, a rate of go is adopted for the new parity, there would be a difference in the purchasing powers of the two curren- cies highly detrimental to French exports, as the franc value of bills drawn in sterling would fall heavily without any hope of an immediate and corresponding fall in the cost of production. Moreover, it will be observed that whenever the policy of a return to stable exchanges has been inaugurated after a heavy depreciation, a new exchange parity has been set up taking into account the purchasing power parity. Subject to these preliminary remarks, the theory or a return to stable exchanges appears to follow from the elements of exchange mechanism and is already confirmed by a number of well-established precedents in recent monetary history. We have indeed observed that the exchange problem, as it presents itself to the minds of economists, arises when a country can no longer use for its international require- ments a currency which can be exported and imported without loss—such as gold which has a constant exchange value in passing from one country to another owing to the system of free coinage and the constant definition of the chief monetary units. On the other hand, as gold only forms part of the circulation in modern countries, the first condition for stabilising the exchanges is the freedom to convert the other elements in the circulation—notes or silver—into gold coin; and the second condition 1s the power freely to export and import this gold. 4 return to convertibility and to the free export and import of gold con- stitutes in the present state of monetary technique the only

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