Abstract
From 2010 to 2012 the euro area was confronted with a dual liquidity crisis, that is, a funding crisis which encompasses both the private and the public sector of a country. Some observers explain the ‘euro crisis-’ by stressing similarities between the exchange rate regime ‘currency union’’ and the exchange rate regime ‘gold standard’’.1 hi particular they point out that, for each of its Member States’ government and banking sectors, the euro constitutes a similar external constraint as was the case with gold for the countries that returned to the gold standard after World War 1 in the mid- to late 1920s (Eichengreen and Tcmin, 2010). Based on a financial accounts framework, this chapter shows how dual liquidity crises unfold and how the elasticity of liquidity provision by a central bank differs under the gold standard and a monetary union.
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© 2014 Ulrich Bindseil and Adalbert Winkler
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Bindseil, U., Winkler, A. (2014). Dual Liquidity Crises under the Gold Standard and in a Monetary Union: A Financial Accounts Perspective. In: Winkler, B., Riet, A.v., Bull, P. (eds) A Flow-of-Funds Perspective on the Financial Crisis. Palgrave Studies in Econmics and Banking. Palgrave Macmillan, London. https://doi.org/10.1057/9781137352989_6
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DOI: https://doi.org/10.1057/9781137352989_6
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