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Money and Credit: Lessons of the Irish Bank Strike of 1970

Malte Krueger ()

Credit and Capital Markets, 2018, vol. 51, issue 4, 645-668

Abstract: In Ireland, there was a bank strike that led to a complete shut-down of the main part of the banking system from May to November 1970. The effects of this strike were surprisingly limited. This had led some observers to conclude that trade credit can easily substitute for bank deposits as a means of payment. In this paper, it is shown how cash and cheques were used as substitutes and complements allowing for “business as usual” for an extended period of time. This paper argues that such a situation would not have prevailed much longer. The lack of a proper settlement mechanism implied that risks were rising for almost all transactors. In order to contain risks the use of trade credit would have declined and economic performance would have deteriorated progressively.

Keywords: money; banking; payments; clearing&settlement; Ireland; trade credit (search for similar items in EconPapers)
JEL-codes: E02 E59 G21 N14 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:kuk:journl:v:51:y:2018:i:4:p:645-668