Euro-Currency Multipliers

  • George W. McKenzie
Chapter
Part of the Problems of Economic Integration book series

Abstract

In Chapter 2 we examined only the initial or first-round implications of euro-currency deposit creation. However, once a bank has obtained additional reserves, whether denominated in domestic or foreign currency, it may want to loan all or part of these funds in order to obtain a profitable return. And this means that another sequence of events will be set in motion with the ultimate impact on the euro-currency system depending upon:
  1. (a)

    whether the funds are lent to another bank or to a non-bank;

     
  2. (b)

    whether the lending bank or the borrower exchanges the funds for another currency; and

     
  3. (c)

    the ultimate purpose which the borrowed funds are used for.

     

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Further Reading

  1. E. W. Clendenning, ‘Euro-Dollars and Credit Creation’, International Currency Review, 3 (Mar–Apr 1971).Google Scholar
  2. Milton Friedman, ‘The Euro-Dollar Market: Some First Principles’, Morgan Guaranty Survey (Oct 1969); reprinted in Review of the Federal Reserve Bank of St Louis, 53 (July 1971).Google Scholar
  3. J. Hewson and E. Sakakibara, ‘The Euro-Dollar Deposit Multiplier: A Portfolio Approach’, International Monetary Fund Staff Papers, 22 (Mar 1975).Google Scholar
  4. F. H. Klopstock, The Euro-Dollar Market: Some Unresolved Issues, Essays in International Finance, no. 65 (Princeton University, Mar 1968).Google Scholar
  5. F. H. Klopstock, ‘Money Creation in the Euro-Dollar Market — A Note on Professor Friedman’s Views’, Review of the Federal Reserve Bank of New York, 52 (Jan 1970).Google Scholar
  6. F. Machlup, ‘Euro-Dollar Creation: A Mystery Story’, Banca del Lavoro Quarterly Review (Sep 1970).Google Scholar
  7. H. Mayer, ‘Multiplier Effects and Credit Creations in the Euro-Dollar Market’, Banca del Lavoro Quarterly Review (Sep 1971).Google Scholar
  8. A. K. Swoboda, The Euro-Dollar Market: An Interpretation, Essays in International Finance, no. 64 (Princeton University, Feb 1968).Google Scholar
  9. J. Tobin, ‘Commercial Banks as Creators of “Money”’, in Banking and Monetary Studies, ed. D. Carson (Homewood, Ill.: Irwin, 1963).Google Scholar

References

  1. 1.
    J. Tobin, ‘Commercial Banks as Creators of “Money”’ , in Banking and Monetary Studies, ed. D. Carson (Homewood, Ill.: Irwin, 1963) pp. 408–19.Google Scholar
  2. 2.
    A. K. Swoboda, The Euro-Dollar Market: An Interpretation, Essays in International Finance, no. 64 (Princeton University, Feb 1968).Google Scholar
  3. 3.
    Milton Friedman, ‘The Euro-Dollar Market: Some First Principles’, Morgan Guaranty Survey (Oct 1969) pp. 4–14; reprinted in the Review of the Federal Reserve Bank of St Louis, 53 (July 1971) pp. 16–24.Google Scholar
  4. 4.
    H. Mayer, ‘Multiplier Effects and Credit Creation in the Euro-Dollar Market’, Banca Nazionale del Lavoro Quarterly Review (Sep 1971) pp. 233–62.Google Scholar
  5. 5.
    E. W. Clendenning, ‘Euro-Dollars and Credit Creation’, International Currency Review, 3 (Mar-Apr 1971) pp. 12–19.Google Scholar
  6. 6.
    J. Hewson and E. Sakakibara, ‘The Euro-Dollar Deposit Multiplier: A Portfolio Approach’, Internetional Monetary Fund Staff Papers, 22 (March 1975) PP. 37–60.CrossRefGoogle Scholar
  7. 7.
    Tobin, ‘Commercial Banks as Creators of “Money”’.Google Scholar
  8. 8.
    Friedman, ‘The Euro-Dollar Market: Some First Principles’.Google Scholar
  9. 9.
    F. H. Klopstock, The Euro-Dollar Market: Some Unresolved Issues, Essays in International Finance, no. 65 (Princeton University, Mar 1968).Google Scholar
  10. 10.
    F. H. Klopstock, ‘Money Creation in the Euro-Dollar Market — A Note on Professor Friedman’s Views’, Review of the Federal Reserve Bank of New York, 52 (Jan 1970) pp. 12–15.Google Scholar
  11. 11.
    Mayer, ‘Multiplier Effects and Credit Creation in the Euro-Dollar Market’, pp. 236–7.Google Scholar
  12. 12.
    Swoboda, The Euro-Dollar Market: An Interpretation. Google Scholar
  13. 13.
    Mayer, ‘Multiplier Effects and Credit Creation in the Euro-Dollar Market’, p. 237.Google Scholar
  14. 14.
    Clendenning, ‘Euro-Dollars and Credit Creation’.Google Scholar
  15. 15.
    Hewson and Sakakibara, ‘The Euro-Dollar Deposit Multiplier: A Portfolio Approach’.Google Scholar
  16. 16.
    Mayer, ‘Multiplier Effects and Credit Creation in the Euro-Dollar Market’, p. 236.Google Scholar
  17. 17.
    Klopstock, The Euro-Dollar Market: Some Unresolved Issues, p. 8.Google Scholar
  18. 18.
    Hewson and Sakakibara, ‘The Euro-Dollar Deposit Multiplier: A Portfolio Approach’.Google Scholar

Copyright information

© George W. McKenzie 1976

Authors and Affiliations

  • George W. McKenzie
    • 1
  1. 1.University of SouthamptonUK

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