During the twentieth century, foreign-exchange intervention was sometimes used in an attempt to solve the fundamental trilemma of international finance, which holds that countries cannot simultaneously pursue independent monetary policies, stabilize their exchange rates, and benefit from free cross-border financial flows. Drawing on a trove of previously confidential data,Strained Relations reveals the evolution of US policy regarding currency market intervention, and its interaction with monetary policy. The authors consider how foreign-exchange intervention was affected by changing economic and institutional circumstancesmost notably the abandonment of the international gold standardand how political and bureaucratic factors affected this aspect of public policy.
| Preface |
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ix | |
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1 On the Evolution of US Foreign-Exchange-Market Intervention: Thesis, Theory, and Institutions |
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1 | (26) |
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2 Exchange Market Policy in the United States: Precedents and Antecedents |
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27 | (29) |
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3 Introducing the Exchange Stabilization Fund, 1934--1961 |
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56 | (64) |
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4 US Intervention during the Bretton Woods Era, 1962--1973 |
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120 | (90) |
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5 US Intervention and the Early Dollar Float, 1973--1981 |
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210 | (58) |
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6 US Foreign-Exchange-Market Intervention during the Volcker-Greenspan Era, 1981--1997 |
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268 | (64) |
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7 Lessons from the Evolution of US Monetary and Intervention Policies |
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332 | (13) |
| Epilogue: Foreign-Exchange-Market Operations in the Twenty-First Century |
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345 | (20) |
| Appendix 1 Summaries of Bank of England Documents |
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365 | (10) |
| Appendix 2 Empirical Method for Assessing Success Counts |
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375 | (14) |
| Notes |
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389 | (22) |
| References |
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411 | (20) |
| Index |
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431 | |
Michael D. Bordo is professor of economics at Rutgers, the State University of New Jersey, and a research associate of the NBER. Owen F. Humpage is a senior economic advisor in the Research Department of the Federal Reserve Bank of Cleveland. Anna J. Schwartz (1915-2012) was a research associate of the NBER.
