The origins of foreign exchange policy: the National Bank of Belgium and the quest for monetary independence in the 1850s | Zendy

Stefano Ugolini | Zendy

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The origins of foreign exchange policy: the National Bank of Belgium and the quest for monetary independence in the 1850s

Author(s) -

Stefano Ugolini

Publication year - 2012

Publication title -

european review of economic history

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 0.606

H-Index - 36

eISSN - 1474-0044

pISSN - 1361-4916

DOI - 10.1093/ereh/her005

Subject(s) - independence (probability theory) , monetary policy , political science , foreign policy , foreign exchange , national bank , economic history , economics , monetary economics , law , finance , politics , mathematics , statistics

International audienceThe monetary policy trilemma maintains that financial openness, fixed exchange rates, and monetary independence cannot coexist. Yet, in the 1850s, Belgium violated this prediction. Through a study of nineteenth-century monetary policy implementation, this article investigates the reasons for such success. This was mainly built on the stabilisation of central bank liquidity, not of exchange rates as assumed by the target-zone literature. Other ingredients included: the role of circulating bullion as a buffer for central bank reserves, the banking system's structural liquidity deficit towards the central bank, and the central bank's size relative to the money market

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