Robert Triffin and the Case for Exchange Controls

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.