The Price of Stability: The balance sheet policy of the Banque de France and the Gold Standard (1880-1914)

Bazot, Guillaume; Bordo, Michael D.; Monnet, Éric

doi:10.3386/w20554

Cited by 22 publications

(1 citation statement)

References 11 publications

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“…Using a VAR, Green (2018) had already shown the significant response of the monthly U.S. stock market to a BoE shock. According to Bazot, Bordo, and Monnet (2014), the monthly French stock market did not respond to a rise in the English rate over the same period. Our results are also consistent with Jordà et al (2019), who looked at the response of annual equity prices to a shock in the BoE discount rate for 12 countries from 1880 to 1914.…”

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confidence: 98%

Taming the Global Financial Cycle: Central Banks as Shock Absorbers in the First Era of Globalization

Bazot¹,

Monnet²,

Morys³

2022

J. Econ. Hist.

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The Classical Gold Standard period, with high capital mobility and fixed-exchange rates, is usually seen as the extreme case of international constraints on monetary policy. Contrary to this view, we show how central bank balance sheets offset the effects of international shocks on domestic interest rates. In contrast, in the United States, a gold standard country without a central bank, the reaction of money market rates was two to four times stronger than that of interest rates in countries with a central bank. Our study is based on the monthly balance sheets of all central banks in the world (i.e., 21) from 1891–1913.

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confidence: 98%

Taming the Global Financial Cycle: Central Banks as Shock Absorbers in the First Era of Globalization

Bazot¹,

Monnet²,

Morys³

2022

J. Econ. Hist.

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Banks, Financial Derivatives, and Crises: A Fourth-Generation Model

Correa

2016

International Trade and International Finance

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Floating a “lifeboat”: The Banque de France and the crisis of 1889

Hautcœur

Riva

White

2014

Journal of Monetary Economics

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in ABSTRACTWhen faced with a run on a "systemically important" but insolvent bank in 1889, the Banque de France pre-emptively organized a lifeboat to ensure that depositors were protected and an orderly liquidation could proceed. To protect the Banque from losses on its lifeboat loan, a guarantee syndicate was formed, penalizing those who had participated in the copper speculation that had caused the crisis bringing the bank down. Creation of the syndicate and other actions were consistent with mitigating the moral hazard from such an intervention. This episode contrasts the advice given by Bagehot to the Bank of England to counter a panic by lending freely at a high rate on good collateral, allowing insolvent institutions to fail.

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The Price of Stability: The balance sheet policy of the Banque de France and the Gold Standard (1880-1914)

Cited by 22 publications

References 11 publications

Taming the Global Financial Cycle: Central Banks as Shock Absorbers in the First Era of Globalization

Taming the Global Financial Cycle: Central Banks as Shock Absorbers in the First Era of Globalization

Banks, Financial Derivatives, and Crises: A Fourth-Generation Model

Floating a “lifeboat”: The Banque de France and the crisis of 1889

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