Abstract
In contrast to the gold standard and the Bretton Woods system, EMS and EMU had been designed as regional currency systems. Hence, the monetary relationship between EMU and the rest of the world is an open issue. There have been periods of “multipolar” currency systems (or non-systems) in the interwar years and after the demise of Bretton Woods, but due to the rapid developments on world financial markets it seems less useful to reassess experiences and debates. At the beginning of the new millennium, the time for fixed-exchange-rate regimes seems to have run out. Only very few, or very small, countries manage to peg their exchange rates to a foreign currency, mainly to the dollar.2
To determine the short-run outcome for the exchange rate, one needs to know its long-run destination.
Christopher Bliss
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References
Bliss 1986: 16.
Cf. Obstfeld/Rogoff 1995, Eichengreen 1999.
There is a link between indebtedness and the exchange rate; when indebtedness becomes large, people look toward Switzerland; and when they look toward Switzerland, the lira goes” (Dornbusch 1995: 199).
Cf. McKinnon 1990.
De Grauwe 1996: 106.
Cf. Bliss 1986, Obstfeld 1995, Taylor 1995.
Begg 1989: 29. Information on relative trade performance, prices, and other goods-market-related items may also influence the exchange rate, but mainly through their impact on portfolio investment decisions, based on shifting creditor-debtor relations, increasing risk premia, or doubts on the long-term sustainability of trade imbalances.
Cf. De Grauwe 1996: 131, Rogoff 1996.
Volcker 1978/79: 10.
Obstfeld 1995: 172, cf. Eichengreen 1993.
Cf. McKinnon 1995. Proposals to stabilize real exchange rates around “fundamental equilibrium values” (Williamson 1993) are ill-conceived because they ignore the basic problem of nominal price level determination. Post Keynesian ideas of banning exports surpluses by taxing creditor nations and also banning unemployment as a “tool” for containing inflation (cf. Davidson 1992/93) simply appear to be a romantic contribution.
England might put up a monument to George Soros whose profitable speculation against the pound forced the country to leave the EMS — and thus enabled the British boom of the 1990s (cf. Dornbusch et al. 1995, Dornbusch 1996b, Obstfeld 1995 ).
Cf. Krugman 1999, Hirsch 1978, Eichengreen et al. 1995b.
Obstfeld/Rogoff 1995: 93.
Cf. Mundell 1995.
It is not a tripolar standard as Japan seems to be neither able nor willing to play a third role. Even Asian countries preferred to peg their currencies to the dollar, but not to the yen. For a discussion of the new constellation on world currency markets see Bergsten (1997), Fratianni/Hauskrecht (1998), Portes/Rey (1998) and Mundell/Clesse (2000).
Krugman 2000: 14.
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© 2001 Springer-Verlag Berlin Heidelberg
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Spahn, HP. (2001). The Multiple International Monetary Standard. In: From Gold to Euro. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-662-04358-5_10
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DOI: https://doi.org/10.1007/978-3-662-04358-5_10
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