‘Nobody’s Child’

doi:10.1017/9781009367578.012

9 - ‘Nobody’s Child’

The Bank of Greece in the Interwar Years

from Part II - Specific

Published online by Cambridge University Press: 02 November 2023

Andreas Kakridis

Edited by

Barry Eichengreen and

Andreas Kakridis

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Barry Eichengreen: Affiliation:
University of California, Berkeley
Andreas Kakridis: Affiliation:
Bank of Greece and Panteion University, Athens

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Summary

Established at the behest of the League of Nations to help the country secure an new international loan, the Bank of Greece was regarded with a mixture of suspicion and hostility from its very foundation. The onset of the Great Depression tested its commitment to defending the exchange rate against domestic pressure to reflate the economy. Its policy response has been criticized as being ineffectual and even detrimental: the bank is said to have been unduly orthodox and restrictive, not only during but also after the country’s eventual exit from the gold exchange standard. This chapter combines qualitative and quantitative sources to revisit the Bank of Greece’s decisions during the Great Depression. It argues that monetary policy was neither as ineffective nor as restrictive as its critics suggest, thanks to a continued trickle of foreign lending but also to the Bank’s own decision to sterilize foreign exchange outflows. It reappraises Greece’s attempt to maintain the gold standard after sterling’s devaluation, a decision routinely denounced as a policy mistake. Finally, it challenges the notion that Greece constitutes an exception to the rule that countries that shed their ‘golden fetters’ faster recovered earlier.

Keywords

Greece Central bank gold standard Great Depression League of Nations monetary policy default money doctors foreign loans Bank of Greece

Type: Chapter
Information: The Spread of the Modern Central Bank and Global Cooperation
1919–1939
, pp. 225 - 267

DOI: https://doi.org/10.1017/9781009367578.012 [Opens in a new window]

Publisher: Cambridge University Press

Print publication year: 2023

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