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- Title
THE CLOAKROOM RULE OF INTERNATIONAL RESERVES: RESERVE CREATION AND RESOURCES TRANSFER.
- Authors
Machlup, Fritz
- Abstract
The article discusses the cloakroom rule of international reserves, its reserve creation and resource transfer. The cloakroom theory of banking opposed that banks were unable to create means of circulation. A cloakroom rule is acquired if the banks' power to create money is recognized and deliberately suppressed. The International Monetary Fund was advisedly reduced to a cloakroom function because the nations were fearful of excessive creation of monetary reserves. If additional reserves under the new system can be created at no cost, the saving will benefit someone and its distribution must needs be arbitrary. The industrial countries may object to covert aid schemes and claim that they should be allowed to create additional reserves without having to earn them through transfers of real resources to developing countries.
- Subjects
RESERVES (Accounting); DEVELOPING countries; INTERNATIONAL economic relations; BANKING industry; INTERNATIONAL Monetary Fund; INDUSTRIAL relations; INTERNATIONAL relations; DEVELOPED countries
- Publication
Quarterly Journal of Economics, 1965, Vol 79, Issue 3, p337
- ISSN
0033-5533
- Publication type
Article
- DOI
10.2307/1882702