Discipline or international balance: the choice of monetary systems in Europe

Abstract

In retrospect and erroneously the nineteenth century international gold standard was interpreted as a quest for monetary discipline. The discipline argument was introduced after WWI in support for a restoration of the gold standard. The interwar failure led to an emphasis on international balances, the argument which came to the fore in the preparations for the Bretton Woods system. The balance argument was central in the early discussions of monetary union in Europe, but with the criticism of Keynesianism the discipline argument became determinant in the design of the Economic and Monetary Union.

Ruled by “fear of floating”. Mexico’s exchange rate policy during the interwar period, 1925-1936

“…Nevertheless, starting in 1934, new plans for the organization of a new international monetary system regime also emerged in Europe. See Ljungberg and Ögren (2022). such as the fear of inflation, were the result of deeply rooted beliefs that dated back to revolutionary years.…”