New paradigms and old promises: central banks and the market for sovereign debt in the interwar period

Juan Flores Zendejas, David Lopez Soto and David Sanchez Amador

No unige:129346, Working Papers from University of Geneva, Paul Bairoch Institute of Economic History

Abstract: This paper analyses the motives behind the establishment of central banks during the interwar period. We argue that most governments with difficulties in accessing financial markets established central banks, as this was a general recommendation provided by contemporary money doctors. However, even if central banks served to facilitate the issue of foreign loans on the New York financial market, we find that governments with central banks did not obtain more favorable terms for those loans. Our analysis further demonstrates that investors concentrated on macroeconomic achievements such as inflation and monetary stability, and whether a lender-of-last resort facility existed, regardless of whether or not this was pursued by a central bank.

Keywords: Money doctors; Central banking; Great depression; Sovereign debt (search for similar items in EconPapers)
JEL-codes: E50 H63 N00 N1 N20 (search for similar items in EconPapers)
Pages: 42 p.
Date: 2020
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-mon
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