ABSTRACT
The policy reactions on the matters did more to divide and destabilise Europe than to unite it and in the longer term they helped to set the stage for the Second World War. The majority of countries in fact adopted a modified form, by which a country’s monetary authority tied its currency to gold indirectly by dealing on the foreign exchange market to maintain a fixed exchange rate with a foreign currency on either a gold coin or gold bullion standard. Growth and stability were slowed down by formidable structural problems following the war and the slowness with which adjustment took place. The most extreme manifestation of the structural problem was to be found in Britain where export losses in traditional products to former markets were severe. National rather than international policies gave rise to a legacy of missed opportunities and hence growth was dampened and structural transformation slowed down.
