ABSTRACT
Introduction I am very happy to contribute this essay to the volume that is being published in memory of Max Fry. I first came to know Max in London in the late 1960s, when we shared what has come to be a lifelong professional interest in monetary issues. Harry Johnson had just come to the London School of Economics (LSE) and taken over Richard Sayers' Monday morning seminar. He had brought with him Chicago-inspired views on money and the monetary approach to the balance of payments. It was an exciting time and place to be beginning a career as a monetary economist. My own alma mater, Cambridge, was still, under Nicky Kaldor, distinctly sceptical of the newly-revived role assigned to money. But the LSE was quietly (or under Harry Johnson, not so quietly) building its reputation as a place to explore new ideas and do solid empirical work. Harry's seminar attracted not just LSE students and faculty, but others, like Max and myself, who were anxious to hear the latest ideas and to test our own thinking. Many will have heard of Harry's legendary whittling. I can testify personally to its psychological power. One day, when presenting a paper to the seminar after a sleepless night wondering how it would be received, I heard Harry begin his usual whittling. At a certain moment the whittling stopped. Everyone knew what that meant. Rather like a VI flying bomb whose motor would cut out seconds before the bomb hit, I feared I was in for one of Harry's devastating attacks. I was at the Bank of England at the time, and Harry was well known for his acerbic views of central bankers. Fortunately for me, however, Harry had just dropped his pen-knife and the whittling resumed before I had time to freeze up completely! In the late 1970s, I came to know Max's wife Celia as well, and from that time our families have been close. I used to visit Max and Celia in their apartment in Yenikoy, just outside Istanbul, when Max was teaching at Boazici University (the old Roberts College). It was a time when I was travelling to Egypt regularly for the IMF, and witnessing the difficulties a country had in emerging from Soviet-style economic planning. I always enjoyed coming to Istanbul (apart from the hair-raising flight on Bulgarian Airlines). Visiting Max and Celia was the main attraction. In addition, however, after the hardships of
Cairo, Istanbul seemed so green, well organised and efficient. Max and Celia used to say I was the only one of their visitors who characterised life in Turkey in those terms! It was during this period that I learned that whenever Max spent six months in one place (sometimes less) he would produce a book called, roughly, 'Money and Banking in [insert name of country]'. In this way he built not only an impressive publication record, but an encyclopaedic institutional knowledge. His natural energy and inquisitiveness always led him to apply existing models to the institutional structures he found in the out-ofthe-way places to which his Graham Greene-type adventuring led him. As a keen follower of the ideas of Ron McKinnon and Ed Shaw, the topic that fascinated him most was how financial repression could retard development. By the 1980s, Celia had persuaded him to become a bit less peripatetic and they settled down in southern California. Marjorie and I visited them in their delightful house in Orange County, and got to know their young family. We wondered what life could be nicer than that of an academic in the University of California system. But Max and Celia always had a yearning to come back to Britain. In a strange way, despite all their travelling, they remained at base very British, in the best sense. I wrote numerous letters of recommendation for Max for academic posts in the UK, but not very persuasively, it seems. Most of the jobs went to people with more conventional British backgrounds. Then, finally, paydirt. Max was appointed to the position at Birmingham Business School, which he held until 1999. He continued to write copiously on monetary economics. When he accepted a position as head of the Bank of England's Centre for Central Banking Studies (CCBS), I had the sense of a wheel turning full circle. We had begun our careers with me at the Bank and him outside. It seemed we were destined to end them with him as the servant of the Old Lady, and me elsewhere. We continued to interact in this period, and I was happy to come occasionally to the CCBS to give lectures. He, in turn, occasionally visited Basle. Our families continued to see each other, both in Switzerland and in Brum. We were all saddened by the turn for the worse in Max's health in the late 1990s. Characteristically, he himself bore it with fortitude and continued working long after others would have given up. Celia and the children were a source of inspiration to him, as, in turn, he was to them and to his many friends. By the time of his death in February 2000, he was no longer able to work, and was in considerable discomfort. Nevertheless, it was a sad blow to his many friends. Marjorie and I were happy to have been able to visit him a couple of weeks earlier. He was lucid and alert, and I was happy to have been able to discuss briefly the first draft of this essay. The subject I have chosen, International financial architecture, is not one that Max worked on directly. I have chosen it, however, because many aspects of the debate on the international architecture are coming back to themes that absorbed Max throughout his professional life. The core of this concern was how to promote more stable and sustainable development through more efficient financial markets. Those of us engaged in the search for a stronger international financial system now find ourselves stressing elements that Max
was writing about for years: market-oriented prudential supervIsIOn, transparency as the basis for improved market functioning, the development of securities markets, liberalisation of financial systems, and so on.
