For an international clearing union

Abstract

Purpose

The purpose of this paper is to make a case for an international clearing house.

Design/methodology/approach

The systems postulate is used: the whole is greater than the sum of the parts. Specifically, the 2007 Godley‐Lavoie model is exploited.

Findings

Domestic banking arrangements are institutionally fragile; they import stability from their central banks. In like manner, relations between central banks must be conducted under a common metric, a world money.

Originality/value

The paper shows that a technical argument for a multilateral clearing house will not be found. The author teases “implicit dynamics” (Stephen Turnovsky) out of national income identities.

Citation

Correa, R. (2012), "For an international clearing union", Journal of Economic Studies, Vol. 39 No. 4, pp. 398-409. https://doi.org/10.1108/01443581211255611