Financial Instability and International-Lender-of-Last-Resort Theory from the Gold Standard to the Dollar System

Abstract

We identify two approaches to financial crises in the history of political economy, namely, the exogenous approach whereby financial crises are sudden events, and the endogenous approach whereby they arise from a long process. In focusing on the endogenous approach, we study the contributions by Thomas Tooke, Ralph Hawtrey, Hyman Minsky and Charles Kindleberger to the lender-of-last-resort theory, especially in international contexts, under the gold standard and the dollar system. The function of the lender of last resort broadens institutionally (depending on the type of securities and on the institutions issuing or holding them) and internationally (depending on jurisdiction and on the type of institutions ultimately requiring international liquidity).

Keywords

• international lender of last resort
• gold standard
• dollar system
• financial instability
• goldstandard
• dollarsystem
• finanzielle instabilität
• b 26
• e 58
• f 33
• g 01