Research Teams

DT 18/14 - Control de Cambios y el Sistema de Cambios Múltiples en Uruguay: 1931-1959

The global economic crisis inaugurated by the Great Depression caused a radical change in
international trade flows and buried definitely the gold standard and automatic adjustment
mechanism of local currencies. Hence, countries should rethink their business relationship and
face the problem of devaluation of local currencies and loss reserves. The institute that countries
appealed to face the new scenario will be: the Exchange Control.
In the case of Uruguay, the Exchange Control (May 1931) is installed as a mechanism to defend
the “peso” and to prevent the outflows of gold and foreign currencies. In the process of installing
this institution, its objectives were extended and begun the use of the multiple exchange rate
system and differential exchange rate to induce structural change, refocus imports, deepening
industrialization, promote exports with a higher added value and create a source of revenue for
the government that was used for income distribution (trough, subsiding popular
In the short run, while Exchange Control gained a greater institutional structure, it will include
not only the fixing of exchange rates and the segmentation exchange market, but it will also be
used to manage the country's foreign trade and subsequently it will be used as an instrument to
promote and protect the industrialization effort. However, by the second half of the fifties it
demonstrated its excessive dependence on international conditions (level of international prices,
etc.); and, internally, it failed to address the inflationary process that was affecting the country.
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