NOMINAL AND REAL YIELDS ON INTERNATIONAL RESERVE ASSETS 1952‐1974

Ph. Callier, Stephen Easton and Herbert Grubel (herbert.grubel@shaw.ca)

Kyklos, 1977, vol. 30, issue 4, 637-656

Abstract: The real rate of return on international financial assets has been low during the period 1952‐1974, the yields of gold and dollars switched dramatically vis‐a‐vis one other in 1968, and the present formula used by the IMF to compute the return on SDRs produced a real rate of return below that available on national currencies over the twenty‐three year period. The low and sometime negative real return on international financial assets suggests that nations value the liquidity services highly and draws further attention to the controversy over the reason for their low yield. The switch in the yields of dollars and gold supplements our understanding of the collapse of the gold exchange standard in 1971. The poor performance of SDRs relative to other stores of international liquidity suggests that the formula for computing the return to SDRs must be revised if they are to play a significant role in the future.

Date: 1977
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