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Central Banks' Intervention in Exchange Rate Markets During the "Classical" Gold Standard: Italy 1880-1913

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  • Paolo Di Martino

    (Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino, Italy)

Abstract

This paper reconstructs the history of direct interventions to support the exchange rate performed by Italian banks of issue between 1880 and 1913. The paper, based on coeval documents, shows how in Italy "central banks" played an active role over the whole period targeting, in particular, the price of public bonds traded internationally as the difference between this price and the one in domestic markets could activate arbitrages able to influence the exchange rate. The paper shows that the end- result of these interventions depended on the interconnection between three variables: the volume of Italian bonds traded internationally, the amount of forex reserves held by "central banks", and the trust in the Italian public finances.

Suggested Citation

  • Paolo Di Martino, 2021. "Central Banks' Intervention in Exchange Rate Markets During the "Classical" Gold Standard: Italy 1880-1913," Working papers 072, Department of Economics, Social Studies, Applied Mathematics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    • Handle: RePEc:tur:wpapnw:072
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    References listed on IDEAS

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    1. Matthias Morys & Guillaume Daudin & Kevin H. O'Rourke, 2008. "Globalization, 1870-1914," Economics Series Working Papers 395, University of Oxford, Department of Economics.
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    6. Bazot, Guillaume & Bordo, Michael D. & Monnet, Eric, 2016. "International shocks and the balance sheet of the Bank of France under the classical gold standard," Explorations in Economic History, Elsevier, vol. 62(C), pages 87-107.
    7. Jobst, Clemens, 2009. "Market leader: the Austro-Hungarian Bank and the making of foreign exchange intervention, 1896–1913," European Review of Economic History, Cambridge University Press, vol. 13(3), pages 287-318, December.
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