The Experience of Exchange Rate Regime Change Among Developing Countries 1968-78
Background:
When the sterling-dollar exchange rate changed in 1971 some sterling area countries chose to shift their peg to the US$ while others continued with sterling. When sterling floated in June 1972, more countries shifted to the US$ but not all. When the system collapsed in 1973 these states then had to choose whether to maintain their peg to a floating US$ or £, or to a basket of currencies, or to float independently.
This project will explore the reasons behind these choices and their outcomes in a variety of institutional settings for Hong Kong, Singapore, Malaysia, Ghana, Nigeria, Australia, New Zealand.
The economics literature on exchange rate choices for developing countries emphasises the importance of institutional structures and their quality in formulating appropriate policy choices. This makes an economic history approach particularly appropriate to study this issue. By accessing archival evidence newly released under the 30-year rule, a more highly textured and direct investigation can be undertaken than hitherto.
The main research questions will be:
1. How did these states manage the transition from pegging their rates to sterling to operating wider bands around a floating US$ or basket currency?
2. What influenced the difference in timing over this decision?
3. How important was the introduction of national currencies in the mid-1960s?
4. How important were balance sheet effects for reserve management?
5. What reforms to financial markets and institutions were required? Were they successful?
6. How did these states manage the diversification of their reserves, amd what impact did this have?
7. How were international capital markets used to manage the transition in different institutional environments?
8. How did the international financial system influence the transition and functioning of the new regimes?
9. How did these states and their financial markets manage their exposure to risk?
Working Papers:
WEF0033
Disentangling from Sterling: Malaysia and the end of the Bretton Woods system 1965-72
Catherine R Schenk
WEF0030
New Zealand's Exchange Rate Regime, the Collapse of Bretton Woods, and the Twilight of the Sterling Area
Catherine R Schenk, John Singleton
WEF0021
Economic and Financial Integration between Hong Kong and Mainland China before the Open Door Policy 1965-75
Catherine R Schenk
Researchers:
Prof Catherine R Schenk
University of Glasgow
Contact:
Prof Catherine R Schenk
Department of Economic & Social History
University of Glasgow
Lilybank House
Bute Gardens
Glasgow
G12 8RT
Tel: 0141 330 6616
Fax: 0141 330 4889
email: c.schenk@socsci.gla.ac.uk
Duration of Research:
July 2006 - June 2009