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The Mechanics of Indirect Convertibility


  • Dowd, Kevin


This paper sets out the mechanics and equilibrating processes of indirectly convertible monetary systems in which currency-issuing banks redeem their currency with redemption media of the same value as the commodity or commodity basket that defines the dollar. It goes on to investigate the 'paradox of indirect convertibility' and suggests that indirect convertibility is feasible despite the paradox. Finally, it assesses the systems of Fisher, Hall, and others that have been suggested as alternatives to indirect convertibility but concludes that these alternative systems are open to serious objections. Copyright 1995 by Ohio State University Press.

Suggested Citation

  • Dowd, Kevin, 1995. "The Mechanics of Indirect Convertibility," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(1), pages 67-88, February.
  • Handle: RePEc:mcb:jmoncb:v:27:y:1995:i:1:p:67-88

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    Cited by:

    1. David Cronin, 2017. "Indirect Convertibility, Equity-Based Banking and Financial Stability," Economic Affairs, Wiley Blackwell, vol. 37(3), pages 357-364, October.
    2. J. S. Ferris & J. A. Galbraith, 2003. "Indirect convertibility as a money rule for inflation targeting," Applied Financial Economics, Taylor & Francis Journals, vol. 13(10), pages 753-761.
    3. J. Stephen Ferris & J.A. Galbraith, 2000. "Indirect Convertibility, Inflation Targeting, and Monetary Policy Rules," Carleton Economic Papers 00-10, Carleton University, Department of Economics.

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