ECO342Y1 Lecture Notes - Gold Standard, Reserve Currency, Open Market Operation
Document Summary
Focus: great britain, france and the u. s. Many believed that a return to gold = stability, and the best policy = return to pre-war rate of exchange. Relative prices had changed dramatically, so this could only be achieved through deflating. Uk, d, n, s, ch, nh returned at pre-war rate mostly in or before 1925. F, i, b returned later, and at devalued rates; G, a, h, p experienced hyperinflation and underwent currency reform. How/to what degree the inter-war gold standard differed from its pre-war predecessor. In the inter-war period, it"s more common for countries to hold foreign reserves, and larger amount. Two reserve currencies: us dollars and pounds. Countries accumulate foreign currency accumulate claims on reserve currency country"s gold. France held lots of pounds; britain has fear of gold shortage thus has to stop such steps raise interest rates, slowing domestic economic activity.
