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Floating against the tide : Spanish monetary policy, 1870-1931

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  • Martínez Ruiz, Elena
  • Martín-Aceña, Pablo
  • Nogues-Marco, María del Pilar

Abstract

The gold standard began to emerge as a universal monetary system in the late 1870s, and it had spread throughout the world economy by 1900. It was unusual for nations to be off the gold standard, and it meant that they were detached from the international financial community. Spain never joined the gold standard club in any of its varieties, either before or after 1914. Unlike the vast majority of the European currencies, the peseta’s exchange rate fluctuated, sometimes widely, against gold and gold currencies. Gold convertibility was suspended in 1883 and never resumed. Nevertheless, the monetary authorities were aware that the Spanish economy, off the gold standard, was an outlier in the international economy and made plans to put the peseta on gold both before and after 1914.Why Spain never adopted the gold standard is a complex issue, and our paper offers a possible answer by examining the behaviour of an issuing bank that refused to accept, or resisted, its role as a central bank. Our study also provides a basis for a comparison between the Bank of Spain, some of its features and policies, with other peripheral issuing institutions. Moreover, our paper encompasses both the pre-war and the post-war periods, which allows us to present both the similarities and the differences in the exchange and monetary policies of the Spanish authorities during the era of the classical gold standard and the years of the gold exchange standard

Suggested Citation

  • Martínez Ruiz, Elena & Martín-Aceña, Pablo & Nogues-Marco, María del Pilar, 2011. "Floating against the tide : Spanish monetary policy, 1870-1931," IFCS - Working Papers in Economic History.WH wp11-10, Universidad Carlos III de Madrid. Instituto Figuerola.
  • Handle: RePEc:cte:whrepe:wp11-10
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    References listed on IDEAS

    as
    1. Bordo, Michael D. & MacDonald, Ronald, 2003. "The inter-war gold exchange standard: credibility and monetary independence," Journal of International Money and Finance, Elsevier, vol. 22(1), pages 1-32, February.
    2. Sabate, Marcela & Gadea, Maria Dolores & Escario, Regina, 2006. "Does fiscal policy influence monetary policy? The case of Spain, 1874-1935," Explorations in Economic History, Elsevier, vol. 43(2), pages 309-331, April.
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    Cited by:

    1. Bazot, Guillaume & Monnet, Eric & Morys, Matthias, 2019. "Taming the gobal financial cycle: Central banks and the sterilization of capital flows in the first era of globalization," IBF Paper Series 03-19, IBF – Institut für Bank- und Finanzgeschichte / Institute for Banking and Financial History, Frankfurt am Main.
    2. Bazot, Guillaume & Monnet, Eric & Morys, Matthias, 2019. "Taming the Global Financial Cycle: Central Banks and the Sterilization of Capital Flows in the First Era of Globalization (1891-1913)," CEPR Discussion Papers 13895, C.E.P.R. Discussion Papers.
    3. Pablo Martín-Aceña, 2017. "THE BANCO DE ESPAÑA, 1782-2017. The history of a central bank," Estudios de Historia Económica, Banco de España;Estudios de Historia Económica Homepage, number 73, December.

    More about this item

    Keywords

    Gold standard;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative

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