Prof Granville on the “Lessons from the Collapse of the Ruble Zone and the Transferable Ruble System”

The consequences of Brexit – especially at pivotal moments in the process like the UK triggering Art.50 at the end of March 2017 – will command attention not only in the UK and the rest of Europe but also among all those around the world looking at Europe with interest and concern. While the implications of Brexit should not be downplayed, the whole subject risks becoming a distraction from the even more important question of the sustainability of the Euro. The deep effects of the chronic crisis of the Eurozone – including, arguably, contributing to Brexit – are generally overlooked, with the economic and political tensions of the Euro only resurfacing periodically when the Greek government needs to access new tranches of the bailout agreement. The fundamental tensions remaining largely unresolved. Since the Eurozone is a source of major potential shocks to the global economy and financial system, the reasons for the failure to resolve those tensions deserve continued close scrutiny.

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“Unconventional monetary policy in the past: Lessons for today” CGR working paper covered in VOX

In one of the latest CGR working papers, “Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the Regime Shift to Paper Money, 1791-1821”, Prof Patrick O’Brien and Dr Nuno Palma obtain important lessons of past monetary policies to explain today’s unconventional monetary policies. As they describe in the abstract:
 

The Bank Restriction Act of 1797 made legal the Bank of England’s suspension of the convertibility of its banknotes. The current historical consensus is that it was a result of the state’s need to finance the war, France’s remonetisation, a loss of confidence in the English country banks, and a run on the Bank of England’s reserves. We argue that while these factors help us understand the timing of the Restriction period, they cannot explain its success. We deploy new long-term data which leads us to a complementary explanation: the policy succeeded thanks to the reputation of the Bank of England, achieved through a century of monetary stability

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