For the last 25 years the industrial countries of the West have experienced continuous rises in p... more For the last 25 years the industrial countries of the West have experienced continuous rises in price levels. However, as shown in Table 1, price indexes rose moderately until the end of the sixties but show a sharp acceleration from then onwards. In this paper attempts are made to identify and explain the main causes of that acceleration. It is, of course, obvious that in every country special factors and circumstances contributed to differences in national inflation rates. These factors we shall neglect.In a similar effort Nordhaus (1972) emphasized that it is difficult to accept the large number of special factors and theories offered to explain the worldwide inflationary phenomenon. After testing, and rejecting as generally applicable, several hypotheses (the monetarist theory, the naive Phillips curve, the expectations Phillips curve, frustration theories, and the Scandinavian model) Nordhaus offers his own interpretation. In a world of interdependent economies a disturbance in...
Preface to the Revised Paperback Edition Introduction Part I A Look Back 1 Evolution of Finance V... more Preface to the Revised Paperback Edition Introduction Part I A Look Back 1 Evolution of Finance Venice, April 1470 1 The functions of finance 2 The first step towards managing financial risk: diversification and collateral 3 The second step towards managing financial risk: limited liability, bankruptcy laws, seniority rules, balance-sheet structure 4 The third step towards managing financial risk: creating tradable instruments and liquidity in organised markets 5 The final step towards managing financial risk: derivatives and financial engineering 6 Could the acceleration in financial innovation since 1970 have been predicted? 7 Conclusion Notes 2 The Americanisation of Global Finance Minnesota Banc Corporation 1 The emergence of the American model of finance 2 The crowning achievement: risk-management finance 3 Maintaining market liquidity: the sine qua non of the American model 4 Global finance: the result of exporting the American model 5 Conclusion Notes 3 Dramatic Events How Ge...
Evolution of the International and Regional Monetary Systems, 1991
One of the major brain childs of Robert Triffin is without any doubt the ECU (European Currency U... more One of the major brain childs of Robert Triffin is without any doubt the ECU (European Currency Unit). In Triffin’s thinking the ECU was to assume several functions: first, to provide an alternative to the US dollar in international official reserve holdings; second, to provide an alternative in private internal portfolios; third, to provide an alternative to the US dollar in international trade invoicing and payments; and, finally, to become eventually the currency of the integrated European economic and monetary union. The desirability of these functions is both obvious and debatable. The evolution of the international monetary system has redistributed the initial concentration of the key currency role of the dollar over several currencies. This redistribution has been influenced both by market forces and political decisions, although national policy makers have been hesitant to declare unequivocally their fundamental preferences concerning the international role of their currency. The authorities of the currencies which have the potential of becoming dollar substitutes are reluctant to assume the responsibility of managing an international reserve currency exposed to the risk of shifts in preferences of major holders of such a currency; tempting is the scope of seigniorage privileges.
The conference organizers very appropriately defined the following questions: (1) Can Europe inte... more The conference organizers very appropriately defined the following questions: (1) Can Europe integrate in the monetary field without the ECU? (2) Can the ECU be used to improve the working of the EMS? (3) Is there a chance for a parallel currency approach to European monetary integration? (4) What could be the strategies for monetary integration in Europe based on the existence of a parallel currency? And how different will the ECU be in the final phase of the integration process as compared with the transitional phase? This chapter attempts to provide some answers following the order of these questions.
SummaryThe Maasstricht Treaty on EMU has generally been hailed as “a victory for the Ecu”. This i... more SummaryThe Maasstricht Treaty on EMU has generally been hailed as “a victory for the Ecu”. This is a misinterpretation. Maastricht is a victory for the EMU. EMU does not require the actual Ecu, and the actual Ecu did not receive a boost from the decision to call the future single currency “Ecu” rather than “Euromark”. Maasstricht has not nailed down the actual Ecu’s future and has left some uncertainties. Finally, it is not certain that the future Ecu will be at least as “hard” as the Deutschemark. The Maastricht Treaty went as far as practically possible in anchoring the Ecu’s stability. But performance will depend on factors outside of the Treaty’s scope.
Any analysis of the future of the transition countries needs to be based on the fact that most of... more Any analysis of the future of the transition countries needs to be based on the fact that most of the countries west of the Former Soviet Union (FSU) have already made their choice: they want to join the European Union (EU). Since it was not possible to join the EU immediately, a transitional arrangement for trade was created in the early 1990s. The first section describes the existing (transitional) arrangements, and the next section provides a theoretical framework for judging their utility as a process towards EU membership.
EMU is expected to foster the emergence of a European capital market and this is arguably one of ... more EMU is expected to foster the emergence of a European capital market and this is arguably one of the most significant gains of monetary union. On the European continent at least, capital markets are still underdeveloped and financial markets are, therefore, bank-dominated. The rise of a large and more efficient capital market changes the competitive position of banks by accelerating disintermediation.
Financial Institutions in Europe under New Competitive Conditions, 1990
A 15th century Venetian or Florentine could have asked a very similar question to the one in the ... more A 15th century Venetian or Florentine could have asked a very similar question to the one in the title of this paper although his notion of the world would have been much more restricted. And one speculates that his final explanation also would have been similar to one I arrive at in this paper: the world around him in terms of technology, trade intensity, trade channels and the associated risks required financial adaptation.
For the last 25 years the industrial countries of the West have experienced continuous rises in p... more For the last 25 years the industrial countries of the West have experienced continuous rises in price levels. However, as shown in Table 1, price indexes rose moderately until the end of the sixties but show a sharp acceleration from then onwards. In this paper attempts are made to identify and explain the main causes of that acceleration. It is, of course, obvious that in every country special factors and circumstances contributed to differences in national inflation rates. These factors we shall neglect.In a similar effort Nordhaus (1972) emphasized that it is difficult to accept the large number of special factors and theories offered to explain the worldwide inflationary phenomenon. After testing, and rejecting as generally applicable, several hypotheses (the monetarist theory, the naive Phillips curve, the expectations Phillips curve, frustration theories, and the Scandinavian model) Nordhaus offers his own interpretation. In a world of interdependent economies a disturbance in...
Preface to the Revised Paperback Edition Introduction Part I A Look Back 1 Evolution of Finance V... more Preface to the Revised Paperback Edition Introduction Part I A Look Back 1 Evolution of Finance Venice, April 1470 1 The functions of finance 2 The first step towards managing financial risk: diversification and collateral 3 The second step towards managing financial risk: limited liability, bankruptcy laws, seniority rules, balance-sheet structure 4 The third step towards managing financial risk: creating tradable instruments and liquidity in organised markets 5 The final step towards managing financial risk: derivatives and financial engineering 6 Could the acceleration in financial innovation since 1970 have been predicted? 7 Conclusion Notes 2 The Americanisation of Global Finance Minnesota Banc Corporation 1 The emergence of the American model of finance 2 The crowning achievement: risk-management finance 3 Maintaining market liquidity: the sine qua non of the American model 4 Global finance: the result of exporting the American model 5 Conclusion Notes 3 Dramatic Events How Ge...
Evolution of the International and Regional Monetary Systems, 1991
One of the major brain childs of Robert Triffin is without any doubt the ECU (European Currency U... more One of the major brain childs of Robert Triffin is without any doubt the ECU (European Currency Unit). In Triffin’s thinking the ECU was to assume several functions: first, to provide an alternative to the US dollar in international official reserve holdings; second, to provide an alternative in private internal portfolios; third, to provide an alternative to the US dollar in international trade invoicing and payments; and, finally, to become eventually the currency of the integrated European economic and monetary union. The desirability of these functions is both obvious and debatable. The evolution of the international monetary system has redistributed the initial concentration of the key currency role of the dollar over several currencies. This redistribution has been influenced both by market forces and political decisions, although national policy makers have been hesitant to declare unequivocally their fundamental preferences concerning the international role of their currency. The authorities of the currencies which have the potential of becoming dollar substitutes are reluctant to assume the responsibility of managing an international reserve currency exposed to the risk of shifts in preferences of major holders of such a currency; tempting is the scope of seigniorage privileges.
The conference organizers very appropriately defined the following questions: (1) Can Europe inte... more The conference organizers very appropriately defined the following questions: (1) Can Europe integrate in the monetary field without the ECU? (2) Can the ECU be used to improve the working of the EMS? (3) Is there a chance for a parallel currency approach to European monetary integration? (4) What could be the strategies for monetary integration in Europe based on the existence of a parallel currency? And how different will the ECU be in the final phase of the integration process as compared with the transitional phase? This chapter attempts to provide some answers following the order of these questions.
SummaryThe Maasstricht Treaty on EMU has generally been hailed as “a victory for the Ecu”. This i... more SummaryThe Maasstricht Treaty on EMU has generally been hailed as “a victory for the Ecu”. This is a misinterpretation. Maastricht is a victory for the EMU. EMU does not require the actual Ecu, and the actual Ecu did not receive a boost from the decision to call the future single currency “Ecu” rather than “Euromark”. Maasstricht has not nailed down the actual Ecu’s future and has left some uncertainties. Finally, it is not certain that the future Ecu will be at least as “hard” as the Deutschemark. The Maastricht Treaty went as far as practically possible in anchoring the Ecu’s stability. But performance will depend on factors outside of the Treaty’s scope.
Any analysis of the future of the transition countries needs to be based on the fact that most of... more Any analysis of the future of the transition countries needs to be based on the fact that most of the countries west of the Former Soviet Union (FSU) have already made their choice: they want to join the European Union (EU). Since it was not possible to join the EU immediately, a transitional arrangement for trade was created in the early 1990s. The first section describes the existing (transitional) arrangements, and the next section provides a theoretical framework for judging their utility as a process towards EU membership.
EMU is expected to foster the emergence of a European capital market and this is arguably one of ... more EMU is expected to foster the emergence of a European capital market and this is arguably one of the most significant gains of monetary union. On the European continent at least, capital markets are still underdeveloped and financial markets are, therefore, bank-dominated. The rise of a large and more efficient capital market changes the competitive position of banks by accelerating disintermediation.
Financial Institutions in Europe under New Competitive Conditions, 1990
A 15th century Venetian or Florentine could have asked a very similar question to the one in the ... more A 15th century Venetian or Florentine could have asked a very similar question to the one in the title of this paper although his notion of the world would have been much more restricted. And one speculates that his final explanation also would have been similar to one I arrive at in this paper: the world around him in terms of technology, trade intensity, trade channels and the associated risks required financial adaptation.
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