A Child of the Interwar Period

Robert Triffin was born in 1911 in Flobecq, Belgium. It was a turbulent period. At the age of 24, the young Triffin had already lived through World War I, monetary and financial turmoil after the war, the Great Depression, the 1935 Belgian franc devaluation, and the rise of fascism. In this chapter, the early period of Triffin’s life is discussed. It focuses on his undergraduate studies at Louvain University, his doctoral studies at Harvard, and his early academic career. During these years, like many people of his generation, Triffin became a profound pacifist. Moreover, as an economist, he became convinced that the market economy was fundamentally unstable. Special attention is paid to his two major publications during these years: an article on the 1935 devaluation of the Belgian franc (Triffin made the calculations) and his PhD on monopolistic competition and general equilibrium theory.

Het dramatisch Eerste Ministerschap van Mark Eyskens : een terugblik na twintig jaar

The Christian-democrat/socialist government Martens IV resigned at the end ofMarch 1981, because the socialist party could not agree with an urgency plan to reorganize the public finances. Mark Eyskens, Minister of Finance in that cabinet, put together a new government as soon as April 6 of the same year. He succeeded as Prime Minister while all the other resigning ministers remained in their function. Minister Robert Vandeputte, an extra-parlementarian and honorary governor of the Central Bank, became the new Minister of Finance. Like the preceding governments, the Eyskens cabinet was strongly hampered by deep mistrust between the coalition partners, opposing views between the two communities of Belgium and by disagreements about the way to deal with the socio-economic crisis.The Eyskens cabinet was particularly confronted with the organization of the restructured steelmill Cockerill-Sambre and with the absolute low point of the economic crisis. The budget was strongly affected by the increasing unemployment benefits and the collapse of the fiscal revenues. Due to the continuing protest of the trade unions, Mark Eyskens did not succeed to adapt the automatic wage indexation in order to improve the competitive position ofthe Belgian enterprises. He did however manage to prevent the devaluation of the Belgian franc, which had come under pressure regularly on the financial markets.By the middle of September 1981 the Eyskens government fell as a result of disagreements between the coalition partners about the financing ofthe money loosing steelmill Cockerill-Sambre in Wallonia. Parliamentary elections were advanced to November 8, 1981. The Christiandemocrats lost a considerable number of seats. A Christian-democrat/liberal cabinet, again headed by Wilfried Martens, emerged by mid December. It would carry out a neoliberal policy. Mark Eyskens became the Minister of Economicaffairs in the new government.

Van devaluatie tot euro : Het economische en meer bepaald het monetaire beleid van België 1980-2000

This article on the evolution of economic and monetary policy in Belgium, which turned the "sick man of Europe" into one of the stronger European economies and allowed it to enter into EMU, stresses the role of the monetary authorities as a stabilising force in Belgium. It gives a detailed analysis of how these changes have allowed Belgium to regain the confidence of both monetary authorities and international investors after the devaluation of 1982. The policy responses to the oil shock at the beginning of the seventies broke with the policy mix which had until then been practised. Both the wage formation process andf iscal policy clearly spiralled out of control, the chiefresult of which was a drastic loss in international competitiveness. As a consequence, the current account showed a large deficit, the traditional level at which public deficit had stood rose dramatically, unemployment exploded and the financial structure of most corporations became fragile.A drastic realignment of economic policy started with the devaluation of the Belgian franc in 1982. This devaluation was accompanied by a series of measures aimed at preventing the inflationary pressures from triggering further devaluations, and hence at restoring credibility. These measures included restrictive fiscal policies (tax increases and cuts inpublic spending) and real wage cuts. By 1987 this recovery policy had successfully restored Belgian competitiveness, reduced the government deficit and restored the balance ofpayments equilibrium. Although public policies became less restrictive during the period 1988-1993, the central bank continued to gain international credibility. Significant stepsin this process were the abolition of the dual exchange rate system, the decision to peg the Belgian franc to the most stable currency in the ERM (i.e. the German mark) and the reform of the money markets in Belgium. The latter in particular helped to increase the central bank's independence, since this reform implied total control by the central bank over short term interest rates, it reduced significantly the automatic credit lines of the fiscal authorities with the central bank and it stipulated that revaluations of gold reserves should no langer be used to finance government budget deficits. By 1992 international credibility had been restored to such a degree that the Belgian franc became a strong currency during the 1992 crisis, obliging the central bank to come to the rescue of the weaker currencies under attack in September 1992 with a speculative inflow of capital of about 200 billion BEF. However this restored credibility continued to be fragile, as became evident during the 1993 exchange rate crisis when the Belgian franc was vigorously attacked by international speculation.The insufficient alignment of public and monetary policies proved to be at the heart of the financial problems of the 1993 crises. The Belgian government relaunched its policies of budgetary restriction and wage moderation, brought together in what was called the 'Global Plan'. This realignment of public policies to monetary policy swiftly restored the credibility of the Belgian franc, so that as early as January 1994 the Belgian franc converged to its central parity with an interest differential vis-à-vis the German mark of only about 2 %. This differential declined progressively. Indeed the global plan restored the confidence of the investors in Belgian economic policy. Financial markets now fully believed in the entry of Belgium into EMU and from then on no major difficulties were to arise.

Europe's monetary malaise: international institutions and domestic policy commitments

A yearlong nightmare for the European Monetary System (EMS) began in September 1992. Amid name–calling, finger–pointing, and hand–wringing, the British pound and the Italian lira dropped out of the Exchange Rate Mechanism (ERM). In succeeding months, virtually every other ERM currency came under attack.1 Three of them—the Spanish peseta, the Portuguese escudo, and the Irish punt—devalued within the system. Three others—the French franc, the Belgian franc, and the Danish krone—avoided devaluation, but only at the price of recurrent and costly rounds of intervention by multiple central banks. Finally, in August 1993, the defenders of the parities surrendered. The twelve EMS countries agreed to expand the fluctuation margins from 2.25 per cent on either side of parity (6 per cent for Spain, Portugal and the UK) to 15 per cent on either side of parity. The wider margins eliminated the potential for speculative attacks, but left the system only the thinnest veneer of exchange rate coordination. This article seeks not to assess the causes of the crisis but rather to explain why the EMS governments did not defuse it with a realignment—the mechanism built into the ERM for precisely such occasions.

De economische actie van de Belgische Staat tijdens de crisis van de jaren 1930

Organized big business and the government basically upheld the same opinions concerning this action: Belgium being a small open, exporting economy, it could only survive by maintaining stable monetary parities (radically excluding any devaluation of the Belgian franc, till 1935), by defending free trade (even if the Belgian authorities themselves were obliged to take some, albeit moderate, protectionist steps), by pursuing internal deflation and balanced budgets.Nevertheless, these traditional methods were only one aspect of the state's economie activity Juring this period. Due to the severity of the crisis, major parts of the economic structure were on the verge of collapse.Consequently, the state was dragged in a whole new series of interventions : financial aid systems, credit enlargements, stimulation of cartellization, enactment of new legal regulations, organisation of suppletive economie functions, etc. All these measures can be characterized as an « external » framework, intended to secure a safe working of the capitalist system. A second stage in state interventionism, directly influencing the internal mechanisms and modalities of investment, production and consumption, was not reached in Belgium before World War II.

De budgettaire, financiële en monetaire politiek van België in 1977

For each topic the obiectives, instruments and performance of the policy concerned are expounded. In the field of fiscal policy special attention is drawn to the rather large deficit of the budget, its consequences and possible remedies. The section on monetary policy deals in particular with the discussion around the maintaining of the Belgian franc within the European small snake and with the argumentation of the Belgian central bank against the monetarist's contention in favour of the monetary rule.

Monetary Dependence in Africa: the Case of Sierra Leone

The exchange rates of several African countries have historically been specified as units of certain ‘master currencies’ of former imperial powers, notably the pound sterling and the French and Belgian francs. The fact that these countries might notionally be said to have belonged to ‘common currency areas’, the Sterling Area and the French and Belgian franc zones, has variously been commended and criticised. To some observers, the break-up of such monetary groupings, following the establishment of national currencies by some African governments shortly after independence, was a retrograde step. This process had offered no alternative basis for rationalising regional monetary and economic co-operation. Others have emphasised the limitations under such arrangements as regards national freedom of initiative in managing exchange rates – even though they would accept that some restrictions may not be inconsistent with the logic of common currency arrangements.