Växelkurspolitik och marknadsintegration. De utländska växelkurserna i Sverige 1834-1880

Sammanfattning: This dissertation deals with the process of stabilisation of foreign exchange rates in Sweden between 1834 and 1880, a period in which foreign trade and the financial system underwent radical changes. Neither was the exchange rate policy static - although it changed within a stable framework of a specie standard. The aim of the dissertation is to analyse the growing stability of foreign exchange rates in this context. Another point of departure is recent developments in exchange rate theories, bringing into focus the behaviour of foreign exchange markets and monetary authorities as well as the role of formal institutions. From this perspective, changes in markets and market conditions were crucial in the development of the foreign exchange and monetary system in 19th century Sweden. The development of Swedish monetary and exchange policies is analysed in a broader context, with the emphasis on changes in economic and financial conditions. Policy changes are analysed in terms of foreign exchange rates and other external monetary variables. Sweden went from a silver standard regime, based almost exclusively on rules, to a gold standard regime with more discretionary measures. However, the basic norms of full convertibility remained intact. The conclusion is that policy changes largely reflect an adjustment to new economic conditions; at the same time changes in the financial system made the implementation of the Riksbank's measures more effective. In this process the Riksbank became increasingly involved in foreign exchange market intervention, providing the exchange rates with an effective floor at parity in 1845 and a ceiling at the specie export point in the early 1860s, thus preventing spontaneous external flows of specie. By the 1870s the Bank's interventions had increased and it became a leading actor in the foreign exchange market. Substantial changes occurred in the financial system and the foreign exchange market. Measures of internal market integration and efficiency - derived from exchange rate series - show that the foreign exchange market went through a process of integration between 1843 and 1880. It is also shown that the major markets in Stockholm and Gothenburg were already efficient in 1843. However, it is indicated that arbitrage between these market places only became efficient in the mid-1860s, as the financial system began to assume modern forms and communications improved. Greater integration and efficiency imply that private speculation, to an increasing degree, kept exchange rates within the specie point spread and had replaced silver arbitrage with private uncovered interest arbitrage by the 1860s. Under a specie standard, the degree of market integration influences the limits of the exchange rate range through transaction costs incurred in silver or gold arbitrage abroad. Measurements of external market integration indicate that costs for arbitrage decreased in the 1850s and 1870s. This integration narrowed the extent of the exchange rate range from roughly 4-6.5 per cent of parity in the 1830s and 1840s to 0.7-1 per cent in the 1870s. To summarise, changes in the foreign exchange policy and market conditions were factors that were closely interrelated in the process of foreign exchange rate stabilisation in Sweden between 1834 and 1880.