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In modern textbooks, Robert Triffin is remembered as the eminent economist who highlighted the unsustainability of the Bretton Woods’ international monetary system. According to Triffin, since the world economy uses a national currency for international settlements, the national economy issuing the reserve currency has to record balance of payment deficits, which are unsustainable over time as the deterioration of the issuing country’s external accounts eventually undermines the confidence in its currency. Therefore, the international economy is torn between, on the one side, the understandable wish to end the balance of payment deficits and, on the other side, the need to provide the world with international liquidity. Hence, the “dilemma” (which came to be known as the Triffin dilemma) was born, which is still debated today (Bordo and McCauley, 2017). Triffin’s solution for satisfying the world’s liquidity requirements and preventing the continuous balance of payments deficit is to create an International Clearing Union, with the power of issuing the international currency.
Although several recent and well-documented studies of economic thought have focused on Triffin’s career (Wilson, 2015; Maes, 2021) and his prominent role in rethinking regional monetary integration (Maes, 2013; Maes and Pasotti, 2016; Rojas, 2020), the significant role of exchange controls in his thought has not been the specific focus of further research. Caldentey and Vernengo (2018) deal with Triffin and exchange control policies, but their study addresses only his Latin American years (1942-1946)…


This article discusses Robert Triffin’s (1911-1993) position on exchange control measures, which should be implemented by the central bank or by a specially-created government institution. Following the experience of such measures in the 1930s and during the war, exchange controls faced general rejection by both official and academic economists. Like most of his contemporaries, Triffin advocated a multilateral international monetary system that would be, ideally, without any discrimination. However, Triffin’s macroeconomic analysis and his international monetary reform proposals led him to a pragmatic position in support of exchange controls on several grounds. First, the world economy is disrupted by cycles and turbulence that call for many countries-especially developing countries-to apply safeguard measures to foreign exchange markets. Second, exchange controls have several advantages for facilitating the balance of payments adjustment. Third, the introduction of exchange controls is inherent in the operations of the international clearing house of which Triffin, inspired by Keynes’ Clearing Union, was a strong supporter.
JEL Classification: B22, E58, F31, F33

  • Triffin
  • Central Banking
  • Exchange Controls
  • Convertibility
Adrien Faudot
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Uploaded on on 26/09/2022
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