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Abstract

This thesis consists of three essays focusing on monetary and central banking history. The first essay, Juno Moneta: The overlooked dimension of liquidity in the international currency choice in the Bretton Woods era analyses the composition of official gold and foreign exchange reserves of Western European countries. Foreign currencies were not alike when held as reserve currencies. I reveal a robust effect of the development of financial markets on the reserve status of a currency. I also show that central banks’ cooperation via the gold pool had an impact of the currency composition of reserves. The second, Zombie International Currency: The Pound Sterling 1945-1971 provides new evidence on the decline of the pound sterling as an international currency. The shift away from sterling occurred earlier than commonly assumed for countries outside the sterling area. I show that the continuation of the postwar reserve role of sterling was possible because the sterling area was a captive market in which countries were constrained to keep their foreign exchange in pounds sterling. The final essay, At Your Service! Liquidity Provision and Risk Management in 19th Century France, studies the trade-off faced by central banks between providing liquidity to a broad group of financial intermediaries, and the risk of moral hazard. In the late 19th century, the Bank of France operated a very broad discount window and used risk management techniques to subdue risk-taking behaviours. This allowed agents to monetise a diverse set of capital. The central bank could thus expand its liquidity facility to help stabilise the economy without suffering losses.

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