Table Of ContentJELLE ZIJLSTRA
A CENTRAL BANKER'S VIEW
JELLE ZIJLSTRA,
A CENTRAL
BANKER'S VIEW
Selected Speeches and Articles
Edited by Prof.dr. C. GOEDHART,
Prof. dr. G.A. KESSLER, Dr. J. KYMMELL and
Prof.dr. F. DE ROOS
....
"
1985
MARTINUS NIJHOFF PUBLISHERS
DORDRECHT / BOSTON / LANCASTER
Distributors
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for the UK and Ireland: Kluwer Academic Publishers, MTP Press Limited, Falcon House,
Queen Square, Lancaster LA 1 1R N, England
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Library of Congress Cataloging in Publication Data
Zijlstra, J.
Jelle Zijlstra, a central banker's view.
(Financial and monetary policy studies: v. 10)
1. Banks and banking, Central--Netherlands--Addresses,
essays, lectures. 2. International finance--Addresses,
essays, lec~~~es. 3. Netherlands--Economic conditions--
1945- -.\c.cresses, essays, lectures. 4. Monetary
policy--Netherlands--Adresse~, essays. lectures.
1. Goedhart. C. (Cornel;s) II. Title. III. Series.
1lr.3116.Z55 lY85 332.1'1'09492 85-R916
ISBN-13: 978-94-010-8768-1 e-ISBN-13: 978-94-()()9-5129-7
DOl: 10.1007/978-94-009-5129-7
Book information
This publication is also no. 50 of the Netherlands Institute of Banking and Stockbroking.
Copyright
© 1985 by Martinus Nijhoff Publishers, Dordrecht.
Softcover reprint of the hardcover I st edition 1985
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted in any form or by any means, mechanical, photocopying, record
ing, or otherwise, without the prior written permission of the publishers,
Martinus Nijhoff Publishers, P.O. Box 163, 3300 AD Dordrecht, The Netherlands.
(iv)
Contents
Preface 0 VII
List of abbreviations 0 IX
Acknowledgements 0 X
Part one. Zijlstra's concerto grosso
Zijlstra's concerto grossoO 3
Fourteen annual reports: Themes and variations (1967-1980),
by Prof Dr. C. Goedhart
Part two. The international monetary system
Statement at IMF Annual Meeting, 1967035
Statement at IMF Annual Meeting, 1968039
Statement at IMF Annual Meeting, 1969043
Some aspects of international monetary reform 047
International monetary reform 0 57
The banking system and the EEC 0 65
Reflections on international economic and monetary problemsO 75
v
CONTENTS
Speech at BIS Annual Meeting, 1974089
Statement at Joint Annual Session of the IMF
and the World Bank, 1975099
The world economy and the monetary systemO 105
Speech at BIS Annual Meeting, 19810113
Part three. The Netherlands economic situation
The Netherlands economy in 1976 - a stock takingO 125
The Netherlands economy in 19770137
The Netherlands economy after the presentation of the budgetO 153
The construction industry in a macro-economic fixO 163
Part four. General monetary reflections
Inflation and its impact on societyO 173
Monetary theory and monetary policy - a central banker's viewO 185
Introduction to 'Schum peter' s Vision' 0 203
Central banking with the benefit of hindsightO 207
Appendix
Major events in the international monetary system
under the presidency of Dr. ZijlstraO 225
VI
Preface
On 1 May 1967 Dr. J elle Zijlstra was appointed President of De
Nederlandsche Bank, after an already eventful career. Following a brief spell
as Professor of Economics at the Free University of Amsterdam, he began
a lengthy period of ministerial service in 1952. During his cabinet years,
he devised a concept which became known in the Netherlands as the' Zijl
stra norm', and which was aImed at keeping the Government's financial
deficit in check. He concluded his active political career .as prime minister
in 1966-1967.
Dr. Zijlstra's career as a politician and central banker covered a
period of nearly 30 years during which the economic scene in the N ether
lands and in the world underwent wide cyclical ups and downs and impor
tant changes of a more long-lasting nature. Successful economic recovery
after the Second World War was followed by a period of rapid and rela
tively stable economic growth. However, as early as the 1960s the condi
tions for the maintenance of equilibrated expansion became less secure.
These conditions were further impaired in the 1970s partly as a result of
important shocks, such as the oil crises.
In the Netherlands, the continuous - and in many respects un
bridled - upsurge of government expenditure and the concomitant rise
in taxes and social insurance contributions furthered cost inflation and
profit erosion. The later years of the 1970s and the early years of the 1980s
were marked by mounting financial deficits of the public sector and by
stagflation. In the outside world deficient international adjustments and
the breakdown of the Bretton Woods system enhanced exchange rate
instability and uncertainty. Large swings in competitive positions and in
terms of trade, high rates of inflation and severe cyclical cutbacks contri
buted to an unstable and rough international economic climate.
In the midst of these manifold changes and distortions, Jelle Zijl
stra gave unceasing attention to the restoration and maintenance of condi
tions which could ensure the continuance and optimal functioning of the
VII
PREFACE
system of free enterprise and free international exchange. He never gave
in to the fashion of the day. As a central banker he fully endorsed the view
that money matters. He did not hesitate to use direct monetary controls
to further monetary stability. However, he remained convinced that other
conditions also had to be fulfilled and that other instruments also had to
play an indispensable role. He was amongst the first to recognize that the
process of profit erosion and upsurge of public expenditure posed a mortal
threat to the functioning of the economic system.
Dr. Zijlstra constantly stressed the importance of international ad
justment and exchange rate stability. When monetarism came in vogue
he called himself a moderate monetarist, but in fact he very much re
mained himself. Adhering to basically simple rules and principles on mon
etary growth, the size and financing of the public sector deficit and wage
increases, he was always able to explain clearly what the primary objec
tives of macro-economic policy should be in order to restore well-balanced
economic conditions and economic growth.
This book contains a collection of speeches and articles delivered
and published by Dr. Zijlstra in his capacity as President of the Nether
lands central bank. They can be seen as catalysts in the monetary debate
both at home and abroad. Professor Goedhart has compiled a summary
of all of the fourteen President's reports written by Dr. Zijlstra. This sum
mary precedes the collection.
This book is published by the Netherlands Institute for Banking
and Stockbroking (Nederlands Instituut voor het Bank- en Eifectenbedrijf) in
honour of Dr. Zijlstra' s outstanding contributions to both economic
thinking and policy making. The Institute hopes that his views will con
tinue to stimulate all those interested in the subject.
R.S.H. MEES
Chairman of the Board
Netherlands Institute for Banking and Stockbroking
VIII
List of abbreviations
Benelux Belgium, Netherlands, Luxembourg
BIS Bank for International Settlements'
ECU European currency unit
EEC European Economic Community
EMS European Monetary system
GAB General Agreement to Borrow
GATT General Agreement on Tariffs and Trade
GNP Gross national product
IDA International Development Association
IMF International Monetary Fund
LDC Less-developed country
OECD Organization for Economic Cooperation and
Development
OPEC Organization of Petroleum-Exporting Countries
SDR Special drawing rights
UNCTAD United Nations Conference on Trade and
Development
US United States
IX
Acknowledgemen ts
'Inflation and its impact on society' was first published in De Econo
mist 123, no. 4, 1975. Reprinted with permission.
'Monetary theory and monetary policy: a central banker's view'
was first published in De Economist 127, no. 1, 1979. Reprinted with per
mISSIOn.
'Introduction to Schumpeter's Vision' was first pubhshed in A. Heer
tje (ed.), Schumpeter's Vision: Capitalism, Socialism and Democracy after 40
years, Amsterdam 1981. Reprinted with the kind permission of Insinger ,
Willems & Cie NY.
'Central banking with the benefit of hindsight' was first published
in De Economist 129, no. 4, 1981. Reprinted with the kind permission of
De Economist and the Per J acobss<;>n Foundation.
x
