International currency and reserve plans

Abstract

In occasion of some recent proposals on currency convertibility, the present work discusses and explains an up-to-date concept of “workable convertibility”. A thorough enquire leeds the author to the conclusion that a workable convertibility would not be incompatible with a certain amount of protection and restrictions, but would entail only the elimination of discrimination and more especially of bilateralism with respect to both trade and payments. Accordingly, a system of convertibility thus organised, while indispensable to the maintenance of international competition, would be subject to a major defect in that it would tend to spread “any deflationary pressures arising from an economic depression or from trade restrictions in one of the major trading centres.” To avoid this drawback, the author suggests a system of “collective arrangements giving operational meaning to the interdependence of the various countries’ policies.”

JEL: E42, F31, F33