NDLI: The sterling trap: foreign reserves management at the Bank of France, 1928-1936

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The sterling trap: foreign reserves management at the Bank of France, 1928-1936

Content Provider	Scilit
Author	Accominotti, Olivier
Copyright Year	2009
Description	French reserves policy during the interwar years has been heavily criticised because of its consequences for other countries. This article presents new monthly data on the Bank of France's foreign reserves currency composition between 1928 and 1936, and identifies the motivations behind reserves policy. The Bank of France's aim was to limit the risk of capital loss on its foreign portfolio. The determining factor in its portfolio allocation decisions was the credibility of reserves currencies on the exchange market. Credibility issues explain both the sale of pounds against dollars during 1929 and 1930 and the massive conversion of foreign holdings into gold from 1931 on. However, due to the huge volume of its reserves, the Bank also had to consider the effects of its own actions on the market. Its cooperative attitude towards sterling in the months before British devaluation can be explained through its market position. The Bank of France's portfolio choice was that of a large player in a low-credibility international monetary system.
Related Links	https://academic.oup.com/ereh/article-pdf/13/3/349/1090755/13-3-349.pdf
Ending Page	376
Page Count	28
Starting Page	349
DOI	10.1017/S136149160999013X
Journal	European Review of Economic History
Issue Number	3
Volume Number	13
Language	English
Publisher	Cambridge University Press (CUP)
Publisher Date	2009-12-01
Access Restriction	Open
Subject Keyword	European Review of Economic History History and Philosophy of Science Bank of France's
Content Type	Text
Resource Type	Article

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