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A Flow-of-Funds Perspective on the Financial CrisisDual Liquidity Crises under the Gold Standard and in a Monetary Union: A Financial Accounts Perspective

A Flow-of-Funds Perspective on the Financial Crisis: Dual Liquidity Crises under the Gold... [From 2010 to 2012 the euro area was confronted with a dual liquidity crisis, that is, a funding crisis which encompasses both the private and the public sector of a country. Some observers explain the ‘euro crisis-’ by stressing similarities between the exchange rate regime ‘currency union’’ and the exchange rate regime ‘gold standard’’.1hi particular they point out that, for each of its Member States’ government and banking sectors, the euro constitutes a similar external constraint as was the case with gold for the countries that returned to the gold standard after World War 1 in the mid- to late 1920s (Eichengreen and Tcmin, 2010). Based on a financial accounts framework, this chapter shows how dual liquidity crises unfold and how the elasticity of liquidity provision by a central bank differs under the gold standard and a monetary union.] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

A Flow-of-Funds Perspective on the Financial CrisisDual Liquidity Crises under the Gold Standard and in a Monetary Union: A Financial Accounts Perspective

Part of the Palgrave Studies in Econmics and Banking Book Series
Editors: Winkler, Bernhard; Riet, Ad van; Bull, Peter
Bindseil, Ulrich; Winkler, Adalbert
A Flow-of-Funds Perspective on the Financial Crisis — Dec 4, 2015
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Publisher
Palgrave Macmillan UK
Copyright
© Palgrave Macmillan, a division of Macmillan Publishers Limited 2014
ISBN
978-1-349-46944-4
Pages
125 –145
DOI
10.1057/9781137352989_6
Publisher site
See Chapter on Publisher Site

Abstract

[From 2010 to 2012 the euro area was confronted with a dual liquidity crisis, that is, a funding crisis which encompasses both the private and the public sector of a country. Some observers explain the ‘euro crisis-’ by stressing similarities between the exchange rate regime ‘currency union’’ and the exchange rate regime ‘gold standard’’.1hi particular they point out that, for each of its Member States’ government and banking sectors, the euro constitutes a similar external constraint as was the case with gold for the countries that returned to the gold standard after World War 1 in the mid- to late 1920s (Eichengreen and Tcmin, 2010). Based on a financial accounts framework, this chapter shows how dual liquidity crises unfold and how the elasticity of liquidity provision by a central bank differs under the gold standard and a monetary union.]

Published: Dec 4, 2015

Keywords: Central Bank; Euro Area; Banking Sector; European Central Bank; Monetary Union

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