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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Chapter

Document type:: Monograph

Structure type:: Chapter

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

Collection:: Economics Books

160 MODERN MONETARY SYSTEMS this would be a highly problematical process, as a dis- located exchange, subject as it is to all the imponderable reactions of speculation, will seldom recover with a steady upward movement. Or else it would be possible to set about devalorising the national monetary unit before abolishing forced currency. Thus, for instance, once the franc was defined as having one-third of the content of fine metal which it has at present, it would have a new and much lower parity which would enable notes to be converted at the rate of one gold franc to each paper franc, and the return to parity would not create too violent a disturbance in the purchasing power parity. But it 1s un- necessary to emphasise the seriousness of such a decision. Moreover, the mere suppression of forced currency, even if it is preceded by a change in the definition of the currency, would still have the effect of making notes con- vertible for all comers and for any purpose, and of putting back into circulation as ordinary currency gold coin which can continue without serious disadvantages to be replaced by notes in internal circulation. Now quite apart from the risk of hoarding which is to be feared after a period of disturbance when public confidence has been seriously shaken, the result of this measure is considerably to reduce the metal reserve of the Bank, using for the quite subsi- diary purpose of an internal instrument of exchange that part of the national volume of currency which ought always to be available to settle any debt balance payable abroad. A number of precedents connected with the return to a stable exchange based on gold (gold exchange standard) which have occurred since the end of the 19th century point the way to another method which is in fact much simpler and more logical. With an internal silver or paper currency, but one which is convertible at a fixed rate for payments abroad, it is possible to give to a given volume of gold its maximum effectiveness, since it is entirely set aside for payments abroad. On the other hand, in fixing the rate of conversion the purchasing power parity ruling at the time when the system is adopted can be taken into account; for

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