Norges Bank

Bicentenary project, Working Paper

The Bank of England as the world gold market-maker during the classical gold standard era, 1889-1910

Author:
Stefano Ugolini
Series:
Working Paper
Number:
15/2012

Abstract
This paper studies the microfoundations of the so-called "gold device" policy by analysing a new dataset on the Bank of England's operations in the gold market at the heyday of the classical gold standard. It explains that "gold devices" must be understood in connection to the Bank's role as gold market-maker in London and to the position of London as world gold market. Contrary to the literature, the paper shows that "gold devices" were sophisticated monetary policy tools intended to complement – not to substitute – interest rate policy and aimed at smoothing – not at hampering – international adjustment. These findings demonstrate the potential of adopting a microstructural approach to the study of monetary policy, and call for a reassessment of efficiency measurement for the gold standard.

Norges Bank’s working papers present research projects and reports that are generally not in their final form. Other analyses by Norges Bank’s economists are also included in the series. The views and conclusions in these documents are those of the authors.

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ISSN 1502-8190 (online)

Published 17 December 2012 10:30
Published 17 December 2012 10:30