We introduce a new weekly database of spot and forward US-UK exchange rates and interest rates to examine the integration of forward exchange markets during the classical Gold Standard period (1880-1914). Using threshold autoregressions (TARs), we estimate the transaction cost band of covered...

Legal restrictions theory suggests that dominance of non-interest-bearing currency is possible only because legal impediments prevent financial institutions from offering interest-bearing alternatives. A viable interest-bearing medium must be issued in denominations low enough for day-to-day...