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Banking crises and the international monetary system in the Great Depression and now1

Published online by Cambridge University Press:  14 March 2011

Richhild Moessner  and
William A. Allen
Richhild Moessner
Affiliation:
Bank for International Settlements and Cass Business School, richhild.moessner@bis.org
William A. Allen
Affiliation:
Cass Business School, bill@allen-economics.com
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Abstract

We identify similarities and differences in the scale and nature of the banking crises in 2008-9 and the Great Depression, and analyse differences in the policy response to the two crises in light of the prevailing international monetary systems. We find that the scale of the banking crisis, as measured by falls in international short-term indebtedness and total bank deposits, was smaller in 2008-9 than in 1931. However, central bank liquidity provision was larger in the flexible exchange rate environment of 2008-9 than in 1931, when it had been constrained in many countries by the gold standard.

Keywords

banking crisisinternational monetary systemGreat Depressioncentral bank liquidity

JEL classification

N1: Macroeconomics and Monetary Economics • Industrial Structure • Growth • Fluctuations F33: International Monetary Arrangements and Institutions E58: Central Banks and Their Policies
Type
The past mirror: notes, surveys, debates
Information
Financial History Review , Volume 18 , Issue 1 , April 2011 , pp. 1 - 20
Copyright
Copyright © European Association for Banking and Financial History e.V. 2011

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