Money, foreign exchange and the balance of payments

Michael Hudson

Chapter 23 in The Elgar Companion to Modern Money Theory, 2024, pp 303-312 from Edward Elgar Publishing

Abstract: Modern Money Theory (MMT) does not explicitly deal with the balance of payments, because it deals with domestic currency, not foreign exchange. However, MMT urges that countries should not rely on foreign creditors for money that is to be spent domestically. Converting foreign currency into domestic money requires the central bank to create the domestic counterpart to its receipt of foreign currency. That raises the question: why borrow at all, if the central bank is going to create domestic money in any case?

Keywords: Economics and Finance; Politics and Public Policy (search for similar items in EconPapers)
Date: 2024
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