Reflections on new currency solutions

Abstract

The Washington agreement of last December achieved an important result in one respect: through an adequate realignment of major currencies it corrected the overvaluation of the dollar, thus setting in motion a process of reabsorption of the fundamental disequilibrium between the U.S. and its main trading partners, to be completed in two years or so. Therefore, it has fully succeeded in solving the immediate problems brought to the surface by the May-August exchange crisis. However, no advance has been made, beyond the identification of the main issues, in solving the structural crisis which has plagued the international monetary system since the beginning of the sixties. The present article examines the adjustment, confidence and liquidity problems of the international monetary reform, the second activation of SDRs and intra-EEC monetary relations.

JEL: E42, F33