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The role of monetary gold over the next ten years

The role of monetary gold over the next ten years

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Published by dtuur
proceedings of the 6th lecture meeting] 28th September, 1969, the Great Hall - International Monetary Fund, Washington, D.C. / by Alexandre Lamfalussy [and others]
proceedings of the 6th lecture meeting] 28th September, 1969, the Great Hall - International Monetary Fund, Washington, D.C. / by Alexandre Lamfalussy [and others]

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Published by: dtuur on Sep 04, 2010
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01/26/2012

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The question is: What is the future of sterling as a reserve currency?
The answer I would give is, along the following lines : 'For any currency
to be a reserve currency, a number

of conditions have to be fulfilled.
Firstly, its value should be recognized to be stable over a long period of
time; secondly, it should have a position in which other countries can
acquire its currency and hold it without imparting a sense of weakness
in that currency.

At one time sterling did perform this function. I doubt if, in that
fundamental sense, it can regain that position. The tendency in all
countries which hold sterling is to diversify their reserves as a kind of
spread of possible risks, and then to spread it in a manner 'in which
their trading conditions indicate as being the most helpful.

The attempt made last year with the agreement at Basle and the
agreement between Britain and the sterling area countries is itself a
recognition that sterling is now a reserve currency in a very different
sense from what it used to be in the days when the sterling area came
into being. This change which has taken place is itself so fundamental
that I cannot but conclude that the prospect of returning ,to the old
position is just not there, and it is not .even desirable from anyone's
point of view to think of harking back to that kind of situation.

QUESTIONS AND ANSWERS - MR. SCHWEITZER

SI

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