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Historical reasons for the focus on broad monetary aggregates in post-World War II Britain and the ‘Seven Years War’ with the IMF

  • Charles A. E. Goodhart (a1) and Duncan J. Needham (a2)
Abstract

The British monetary authorities have traditionally focused on broader monetary aggregates than their counterparts elsewhere. The reasons include: the willingness of UK banks to allow customers to make payments by drawing on time deposits, the particularities of the UK approach to managing the national debt and the foreign exchange reserves, and the flow-of-funds system of national accounts developed after World War II. This article outlines these reasons, and explores the implications for the UK's often fractious relationship with the International Monetary Fund during the 1950s and 1960s. It explains why IMF conditionality on loans to the UK focused on broad aggregates.

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Copyright
Corresponding author
D. J. Needham (corresponding author), Darwin College, University of Cambridge, Silver Street, Cambridge cb3 9eu , UK; email: djn33@cam.ac.uk.
Footnotes
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The authors are grateful to two anonymous referees for their comments.

Footnotes
References
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Bank of England Archive, London
International Monetary Fund Archive, Washington DC
The National Archives, London
Bank of England Statistical Summary
Bank of England Quarterly Bulletin (BEQB)
Economic Trends
The Economist
Financial Statistics
Hansard
International Financial Statistics (IFS)
Midland Bank Review
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Financial History Review
  • ISSN: 0968-5650
  • EISSN: 1474-0052
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