Liquidez bancaria y letras reales: Comentario de D. Fernández Méndez

Daniel Fernández Méndez nos envía su propio aporte al debate que están manteniendo en estos días Nicolás Cachanosky y Juan Ramón Rallo. Lo compartimos a continuación.

Nicolas Cachanosky has published recently an article criticizing the Real Bills Doctrine. The debate started with Rallo interviewing White in Juan de Mariana´s Institute. Later White criticized the Rallo´s point of view held in the interview here. Rallo rejoinder to White´s points can be found here. So far the last contribution to the bilateral debate was on White´s side here. So Nicolas is the last adherent to the controversy. I will answer the different critiques made by Nicolas in his article.

a. Banks manage flows not stocks.

Maturity mismatch is still a problem in flow terms. The saving flows materialize in a stock of capital. Banks receive saving flows and allocate them in capital structures through lending to producers. The maturity profile of the capital structure influence their composition (it is clear that it´s not the same a capital structure oriented towards long term capital as the housing market than having an agricultural or commodity oriented economy). Long term capital stocks hasn´t the ability to produce income flows at short notice. So finally stocks matters.

In fact, flows are transformed into stocks that in turn, produce another flows in the future. This is nothing else that the process of capitalization of an economy. Savings (flows) are transformed in certain kind of wealth (capital) that produce another kind of flow (income). As Rallo points out, stocks are nothing else than the present value of future flows.

The key point here is if the expected flows of both, producers and savers are aligned with current flows. As we are going to argue below, the maturity mismatch causes misalignment between them.

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