ABSTRACT

It would be advantageous if the new credit instruments envisaged could be discounted by the central banks on their domestic markets in a manner that would soak up liquidity. The ill effects of the accumulation of an enormous mass of dollars by the central banks could have been avoided. A few countries demanded full gold settlement, at least on some occasions; the others affected to consider dollars as the equivalent of gold. The United States having condemned itself to deploy only a small armament to defend its currency on the market, when the dollar has needed support, the principal effective means has been whatever purchases of dollars the central banks of other countries were disposed to make. All evidence suggests that the situation would have been both healthier and more balanced if the United States had done as its partners did and taken responsibility for the protection of its own currency.