BRITISH CURRENCY SCHOOL Meaning and
Definition
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The term "British Currency School" refers to a group of economists and theorists who emerged in the mid-19th century in Britain. This school of thought primarily focused on issues related to money, banking, and the role of currency in the economy. The thinkers associated with this school were influenced by the classical economists and their emphasis on the importance of money supply and its effect on economic stability.
One of the key beliefs of the British Currency School was the adherence to the "Currency Principle." According to this principle, the amount of money in circulation should be tightly controlled by the central bank to maintain stability and prevent excesses that could lead to inflation or economic crises. They strongly advocated for a strict adherence to gold convertibility, which meant that the currencies should be backed by gold reserves to avoid excess printing of money.
Members of the British Currency School argued against the idea of over-issuance of banknotes by private banks, as they believed this practice would lead to economic instability. They also opposed the idea of free banking, advocating for central bank control over the money supply.
Overall, the British Currency School played a significant role in shaping monetary policies in Britain during the 19th century. However, their influence gradually declined as new economic theories and challenges emerged in the following decades.
