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From Obscurity to Notoriety: A Biography of the Exchange Stabilization Fund


  • Schwartz, Anna J


The U.S. Treasury's $20 billion loan to Mexico in January 1995 from the Exchange Stabilization Fund (ESF) brought to public notice the fund that had functioned in obscurity since its authorization by the Gold Reserve Act of January 31, 1934. The design of the ESF, as set forth in the statute, contributed to its obscurity. Its stated mission was to stabilize the exchange value of the dollar, but it has also assumed a role that had no mandate, that of lender to favored countries. ESF's intervention activities and the Federal Reserve's warehousing of ESF foreign currency assets are questionable. A statistical profile of the ESF accounts for the growth of its working balance from $200 million in 1934 to $42.6 billion in assets in 1995. Copyright 1997 by Ohio State University Press.

Suggested Citation

  • Schwartz, Anna J, 1997. "From Obscurity to Notoriety: A Biography of the Exchange Stabilization Fund," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(2), pages 135-153, May.
  • Handle: RePEc:mcb:jmoncb:v:29:y:1997:i:2:p:135-53

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    References listed on IDEAS

    1. Gold, Joseph, 1988. "Mexico and the development of the practice of the International Monetary Fund," World Development, Elsevier, vol. 16(10), pages 1127-1142, October.
    2. Edwin M. Truman, 1996. "The Mexican peso crisis: implications for international finance," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Mar, pages 199-209.
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    Cited by:

    1. Garbade, Kenneth D., 2016. "The first debt ceiling crisis," Staff Reports 783, Federal Reserve Bank of New York.
    2. Charles Calomiris & David Wheelock, 1998. "Was the Great Depression a Watershed for American Monetary Policy?," NBER Chapters,in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 23-66 National Bureau of Economic Research, Inc.
    3. Bordo, Michael D. & Schwartz, Anna J., 1999. "Under what circumstances, past and present, have international rescues of countries in financial distress been successful?," Journal of International Money and Finance, Elsevier, vol. 18(4), pages 683-708, August.
    4. Michael D. Bordo & Owen Humpage & Anna J. Schwartz, 2007. "The historical origins of US exchange market intervention policy," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 109-132.
    5. R. W. Hafer, 1999. "Against the tide: Malcolm Bryan and the introduction of monetary aggregate targets," Economic Review, Federal Reserve Bank of Atlanta, issue Q1, pages 20-37.
    6. James M. Boughton, 2006. "American in the Shadows; Harry Dexter White and the Design of the International Monetary Fund," IMF Working Papers 06/6, International Monetary Fund.
    7. J. Bradford DeLong & Barry Eichengreen, 2001. "Between Meltdown and Moral Hazard: The International Monetary and Financial Policies of the Clinton Administration," NBER Working Papers 8443, National Bureau of Economic Research, Inc.
    8. Michael D. Bordo & Owen F. Humpage & Anna J. Schwartz, 2016. "On the Evolution of U.S. Foreign-Exchange-Market Intervention: Thesis, Theory, and Institutions," NBER Chapters,in: Strained Relations: U.S. Foreign-Exchange Operations and Monetary Policy in the Twentieth Century, pages 1-26 National Bureau of Economic Research, Inc.
    9. Robert L. Hetzel, 1997. "The case for a monetary rule in a constitutional democracy," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 45-66.
    10. Michael Bordo & Anna J. Schwartz, 2001. "From the Exchange Stabilization Fund to the International Monetary Fund," NBER Working Papers 8100, National Bureau of Economic Research, Inc.

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