| Summary: | The existence of a self-regulating arbitrage mechanism under the gold standard has been tradi- tionally considered as one of its main advantages, and attracted a corresponding research interest. This research is arguably relevant not only to test for the e±ciency of the \gold points", but also to study the evolution of ¯nancial integration during the so-called ¯rst era of globalization. Our ¯rst aim with this paper is to contribute to the enlargement of the scope of the literature by considering the case of Portugal that adhered to the system, in 1854, at a much earlier phase than the ma- jority of countries, thus allowing for a broader perspective on the evolution of the e±ciency of the foreign exchange market. As a typical \peripheral" country, Portugal can be used as the starting point for a study of the degree of integration of the periphery within the system. Furthermore, the Portuguese exchange also illustrates the role in practice of large players in sustaining currency stability, over and beyond the atomistic forces of arbitrage and speculation assumed in conven- tional theoretical frameworks. We also address the question of the credibility of the authorities' commitment to the standard, through the perspective of the target zone literature.
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