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Tarkka, J. What Can We Learn from the Real Bills Doctrine?. Credit and Capital Markets – Kredit und Kapital, 52(1), 89-113. https://doi.org/10.3790/ccm.52.1.89
Tarkka, Juha "What Can We Learn from the Real Bills Doctrine?" Credit and Capital Markets – Kredit und Kapital 52.1, 2019, 89-113. https://doi.org/10.3790/ccm.52.1.89
Tarkka, Juha (2019): What Can We Learn from the Real Bills Doctrine?, in: Credit and Capital Markets – Kredit und Kapital, vol. 52, iss. 1, 89-113, [online] https://doi.org/10.3790/ccm.52.1.89

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What Can We Learn from the Real Bills Doctrine?

Tarkka, Juha

Credit and Capital Markets – Kredit und Kapital, Vol. 52 (2019), Iss. 1 : pp. 89–113

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Article Details

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Juha Tarkka, Dr. Soc. Sc. (econ) Bank of Finland, PO Box 160, 00101 Helsinki, Finland

References

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  54. Aldcroft, D. H. (1987): From Versailles to Wall Street. Aylesbury: Pelican Books.  Google Scholar
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  64. Brunnermeier, M. K./Pedersen, L. H. (2009): Market Liquidity and Funding Liquidity. The Review of Financial Studies Vol. 22, No. 6.  Google Scholar
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  66. Claassen, E.-M. (1985): The Lender-of-Last-Resort Function in the Context of National and International Financial Crises. Weltwirtschaftliches Archiv, Vol 121, No. 2.  Google Scholar
  67. Daugherty, M. (1942): The Currency-Banking Controversy. Southern Economic Journal, Vol. 9, No. 2.  Google Scholar
  68. Diamond, D. (1984): Financial Intermediation and Delegated Monitoring. Review of Economic Studies Vol. 51, No. 3.  Google Scholar
  69. Diamond, D. (1997): Liquidity, Banks, and Markets. Journal of Political Economy, Vol. 105, No. 5.  Google Scholar
  70. Diamond, D. W./Dybvig, P. H. (1983): Bank Runs, Deposit Insurance, and Liquidity. Journal of Political Economy Vol. 91, No. 3.  Google Scholar
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  75. Goodhart, C. (1988): The Evolution of Central Banks. Cambridge, Mass.: MIT Press.  Google Scholar
  76. Goodhart, C. (2008): Liquidity Risk Management. Banque de France Financial Stability Review No. 11, February 2008.  Google Scholar
  77. Goodhart, C. (2011): The Basel Committee on Banking Supervision. A History of the Early Years 1974–1997. Cambridge: Cambridge University Press.  Google Scholar
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  79. Hetzel, R./Leach, R. (2001): The Treasury-Fed Accord: A New Narrative Account. The Federal Reserve Bank of Richmond Economic Quarterly, Vol. 87, No. 1.  Google Scholar
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  84. Humphrey, T. (1982): The Real Bills Doctrine. The Federal Reserve Bank of Richmond Economic Quarterly, Vol. 68, No. 3.  Google Scholar
  85. IMF (2010): “Reserve accumulation and international monetary stability”, paper prepared by the Strategy, Policy and Review Department. Accessed 16 February 2018, https://www.imf.org/external/np/pp/eng/2010/04130.pdf.  Google Scholar
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  87. Laidler, D. (1984): Misconceptions about the Real-Bills Doctrine: A Comment on Sargent and Wallace. Journal of Political Economy, Vol. 92, No. 1. 149–155.  Google Scholar
  88. Luckett, D. G./Steib, S. B. (1978): Bank Soundness and Liability Management. Nebraska Journal of Economics and Business, 17:3, 37–47.  Google Scholar
  89. MacLaury, B. K. (1973): Liability Management. Speech December 7, 1973. Statements and Speeches of Bruce K. MacLaury. 1971–1976, https://fraser.stlouisfed.org/title/1114, accessed on December 9, 2016.  Google Scholar
  90. Meltzer, A. (2003): A History of the Federal Reserve. Volume I: 1913–1951. Chicago: The University of Chicago Press.  Google Scholar
  91. Mints, L. (1945): A History of Banking Theory in Great Britain and the United States. Chicago: University of Chicago Press.  Google Scholar
  92. Mitchell, W. F. (1923): The Institutional Basis for the Shiftability Theory of Bank Liquidity. The University Journal of Business, Vol. 1, No. 3.  Google Scholar
  93. Modigliani, F./Miller, M. H. (1958): The Cost of Capital, Corporation Finance and the Theory of Investment. The American Economic Review Vol. 48, No. 3.  Google Scholar
  94. Morton, W. A. (1939): Liquidity and Solvency. American Economic Review, Vol 29, No. 2.  Google Scholar
  95. Moulton, H. G. (1918): Commercial Banking and Capital Formation III. Journal of Political Economy, Vol. 26, No. 7.  Google Scholar
  96. OECD (1985): Trends in Banking in OECD Countries. Paris: OECD.  Google Scholar
  97. Phillips, R. (1996): The Chicago Plan and New Deal banking reform. In D. Papadimi­triou, ed.: Stability in the Financial System. New York: Macmillan.  Google Scholar
  98. Prochnow, H. (1949): Bank Liquidity and the New Doctrine of Anticipated Income. The Journal of Finance, Vol. 4, No. 4.  Google Scholar
  99. Rajan, R. (2005): Has finance made the world riskier? in The Greenspan Era: Lessons for the Future, Federal Reserve Bank of Kansas City.  Google Scholar
  100. Smith, A. (1991): The Wealth of Nations. Everyman edition (original 1776).  Google Scholar
  101. Stein, J. (1998): An Adverse-Selection Model of Bank Asset Management with Implications for the Transmission of Monetary Policy. The RAND Journal of Economics, Vol. 29, No. 3.  Google Scholar
  102. Steuart, S. J. (1966): An Inquiry into the Principles of Political Oeconomy. Volume Two (original 1765). Chicago: The University of Chicago Press.  Google Scholar
  103. Van Dillen, J. G. (1964): History of the Principal Public Banks (original 1934). London: Frank Cass.  Google Scholar
  104. Williamson, J. (1995): What Role for Currency Boards. Washington: Institute for International Economics.  Google Scholar

Abstract

The historical development of bank liquidity doctrines is surveyed from the real bills doctrine and its antecedents to the present day. The underlying ideas of the succession of several dominant liquidity doctrines are analysed and compared, with attention to their historical contexts and respective weaknesses as exposed by experience. While the real bills doctrine is obsolete as such, its central idea that the liquidity of banks requires their credit to be linked to real income generation in the economy is unique among the different liquidity doctrines and can be useful as the liquidity regulation of banks is now subject to renewed interest.