Abstract: This chapter looks first at some of the critical financial developments in the 1920s. These include the problems of inflation and hyper-inflation which afflicted almost all the European economies, and the instability of many of their banking systems. It then focuses on exchange rates, and analyses the different routes followed by the main countries in their attempts to stabilize their currencies and to return to the gold standard. The final theme in this chapter is the operation of the gold standard during this decade, and the reasons why it failed to provide the benefits in international trade and growth its advocates had anticipated.

Keywords: inflation, hyper-inflation, exchange rates, gold standard, banking crises, stabilization loans, international cooperation, deflation,