Euro-Dollars

While the official world was moving forward in a rather fumbling way towards a tentative scheme, not on the face of it very satisfactory, for supplementing international liquidity, private enterprise was proceeding swiftly to establish an international short-term capital market. This event will surely rank as a great landmark in monetary history. From time to time the author of this volume has shown that he has no prejudice in favour of private enterprise as such, e.g. in his recommendation of indicative planning, even on a world scale, of an incomes policy, possibly with legal sanctions, of quantitative import controls, to cite some instances only. But in this matter of an international capital market, hats must be taken off to the marvellous achievement of private enterprise. Economists have not yet succeeded in relating its functions and effects to a theoretical framework. What follows can, therefore, be tentative only. The primary function of this market, as in the case of any market, is to bring supply into contact with demand. On the one side monetary balances which might otherwise have remained idle are activated or, alternatively, are put to more fruitful uses, and, on the other, projects that might have been impeded by lack of finance are enabled to go forward.