Mutual Currency Arrangements

  • Roy Harrod


IT has been suggested that we could dispense with any large increase in the value of the gold supply and with any very extensive increase in the facilities provided by the I.M.F. by a system of mutual accommodation between central banks. If central bank A knew that at any time central banks B, C, etc., would allow it to draw upon them up to limited amounts, central bank A could regard this willingness as an addition to its liquid assets, just as if it had acquired an increase of gold or an increased drawing right on the I.M.F. of equivalent amount. This would be analagous to the case of an individual who had a standing agreement with his bank manager for an overdraft facility; he would feel liquid to that extent, and might even behave as though he had a positive balance at his bank of the amount in question.


Central Bank International Liquidity Creditor Country World Reserve Mutual Accommodation 
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© Roy Harrod 1965

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  • Roy Harrod

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