International Liquidity and the Stability of Exchange Markets

Paul Davidson

Chapter 6 in International Money and the Real World, 1992, pp 105-115 from Palgrave Macmillan

Abstract: Abstract The fundamental question for monetary theory is why do people hold money which is barren, rather than interest-bearing securities or productive physical goods? The answer involves uncertainty about the future and the resulting inability to assure precisely the coordination of cash inflows with contractual cash outflow commitments. The holding of liquidity avoids the embarrassment, economic paralysis and perhaps even the death of any household or enterprise due to an inability to meet one’s contractual cash payment commitments.1

Keywords: Exchange Rate; Central Bank; Exchange Market; Foreign Exchange Market; Flexible Exchange Rate (search for similar items in EconPapers)
Date: 1992
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DOI: 10.1057/9780230378094_6

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