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The global exchange rate system in transition


The aim of this paper is to assess reform proposals allowing a transition from the present international exchange rate mechanism to a more effective successor. Judgments are founded on preventing the drawbacks of the Bretton Woods system, using new theoretical findings, and building on recent international cooperation efforts. Features of an optimal global exchange rate system for the near future are: soft target zones for the major currencies, sterilised exchange market interventions to counter bandwagon effects, and currency blocs around the major currencies. For the longer term, Williamson's extended target zone is a potential candidate, despite missing indispensable information.

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The author thanks S.K. Kuipers, B. Leeftink and J.K. Martijn for their useful comments on the draft.

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Jager, H. The global exchange rate system in transition. De Economist 139, 471–496 (1991). https://doi.org/10.1007/BF01718377

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  • Exchange Rate
  • Exchange Market
  • Rate Mechanism
  • International Exchange
  • Theoretical Finding