Table Of ContentInternational
Money and
Credit: The
Policy Roles
©International Monetary Fund. Not for Redistribution
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©International Monetary Fund. Not for Redistribution
International
Money and
Credit: The
Policy Roles
Edited by
George M. von Furstenberg
INTERNATIONAL MONETARY FUND • 1983
WASHINGTON, D.C.
©International Monetary Fund. Not for Redistribution
© 1984 The International Monetary Fund
First printing, January 1984
Second printing (softcover), January 1985
Third printing (softcover), March 1988
Price: US$15.00
International Standard Book Numbers:
ISBN 0-939934-26-4 (hardcover)
ISBN 0-939934-27-2 (softcover)
©International Monetary Fund. Not for Redistribution
Acknowledgments
Preparation and conduct of the Conference on International Money,
Credit, and the SDR—which was held in the Executive Board Room of the
International Monetary Fund in Washington on March 24-25, 1983—
involved principally the following persons at the Fund:
Conference Host, Chairman, and Overall Direction
Mr. Wm. C. Hood
Economic Counsellor
and
Director of the Research Department
***
Chairpersons
Mr. William B. Dale
Deputy Managing Director
Mr. Alexandre Kafka
Executive Director
and
Dean of the Executive Board
Mr. J.J. Polak
Executive Director
Mr. Walter O. Habermeier
Counsellor and Treasurer
Mr. C. David Finch
Director
Exchange and Trade Relations Department
Mr. Rudolf R. Rhomberg
Deputy Director
Research Department
***
V
©International Monetary Fund. Not for Redistribution
vi ACKNOWLEDGMENTS
Organization, Content, and External Liaison
Mr. George M. von Furstenberg
Chief, Financial Studies Division
Research Department
Internal Liaison and Executive Board Arrangements
Mr. Alan Wright
Deputy Secretary, Secretary's Department
Editorial and Publication Arrangements
Messrs. A.W. Hooke and Paul Gleason
Editors, External Relations Department
Press Relations and Publicity
Mr. Charles S. Gardner
Deputy Director, External Relations Department
Biographical sketches of the presenters and discussants of conference
papers, Chapters 1-8, are provided at the end of this volume. The sum-
mary of the conference findings, Chapter 9, was produced by Mr. George
M. von Furstenberg on the basis of the panel discussion between present-
ers and Executive Directors which concluded this conference. Of the back-
ground papers, which were distributed in advance to conference partici-
pants (Chapters 10-13), Chapter 10 was written by Mr. Robert E. Cumby
while he was in the Research Department of the Fund; Chapter 11 was
prepared in the Research Department; and Chapters 12 and 13 in the
Treasurer's Department, all in consultation with other departments.
©International Monetary Fund. Not for Redistribution
Contents
Page
Acknowledgments v
Introduction
J. de Larosiere 1
1. Functioning of the Current International Financial System:
Strengths, Weaknesses, and Criteria for Evaluation
Thomas D. Willett 5
I. Objectives for the International Monetary System
and Framework for Analysis 10
II. Improving International Monetary Analysis 30
III. Evaluating the Current System: A Summing Up 35
Comments
Rudiger Dornbusch 45
Janos Fekete 51
Alexander K. Swoboda 56
2. International Liquidity and Monetary Control
Jacob A. Frenkel 65
I. International Reserves 66
II. International Constraints on Monetary Control 86
III. Exchange Market Intervention 92
IV. Guidelines for Monetary Policy 94
V. Role of the Fund and Institutional Reform 102
Comments
Ryutaro Komiya 110
Douglas D. Purvis 115
Rainer Masera 123
3. International Balance of Payments Financing and Adjustment
Willem H. Buiter and Jonathan Eaton 129
I. Closed-Economy Model 132
II. Open-Economy Model with Reserves 135
III. Multicountry Equilibrium 142
IV. Possible Extensions 145
V. Conclusions 147
vii
©International Monetary Fund. Not for Redistribution
viii CONTENTS
Page
Comments
Ricardo H. Arriazu 149
Michael Bruno 157
Rimmer de Vries 166
4. The SDR and the IMF: Toward a World Central Bank?
Stanley Fischer 179
I. A Single World Money (WM) 180
II. WM Exchange Standard 187
III. Flexible-Rate WM System 189
IV. The IMF and the SDR 191
Comments
Michael Parkin 200
Don Roper 208
5. Is There an Important Role for an International Reserve Asset
Such as the SDR?
W.M. Corden 213
I. SDRs Within Current System 214
II. A Fixed-Exchange-Rate World 233
III. A Review of the Past 237
IV. Conclusion 244
Comments
Sven Grassman 248
Herbert G. Grubel 252
6. International Moneys and Monetary Arrangements in Private
Markets
David F. Lomax 261
I. Introduction 261
II. Use of Non-Domestic Moneys 267
III. CFA Franc Zone 269
IV. Currency Units 270
V. Bond Issues in All Units 287
VI. Corporate Currency Risk Management 293
VII. Euromarket Development 301
VIII. The SDR 304
IX. Summary and Conclusions 309
©International Monetary Fund. Not for Redistribution
CONTENTS ix
Page
Comments
Marinus W. Keyzer 319
Manfred J.M. Neumann 322
7. Use of the SDR to Supplement or Substitute for Other Means
of Finance
Peter B. Kenen 327
I. Where We May Be Going 328
II. Where We Should Be Going 333
III. Interdependence of Institutional Arrangements 338
IV. How to Make the SDR a More Important Reserve
Asset 341
V. Making the SDR More Usable 342
VI. Substitution Once Again 349
VII. An International Monetary Fund Based Almost
Fully on the SDR 356
Comments
Richard N. Cooper 361
John Williamson 367
8. What Are the Scope and Limits of Fruitful International
Monetary Cooperation in the 1980s?
Paul De Grauwe 375
I. How Much Exchange Rate Flexibility? 376
II. Problems of Cooperation in Foreign Exchange
Market Intervention 385
III. Role of Expectations 395
IV. International Reserves and the Money Supply Process 397
V. International Reserves and World Money Stock:
Empirical Tests 401
VI. Conclusion 403
Comments
Emil-Maria Claassen 409
Niels Thygesen 419
9. Summary of Findings 429
I. How the System Has Functioned and How It Can
Be Improved 429
II. SDRs, Surveillance, and the Role of the Fund 432
©International Monetary Fund. Not for Redistribution
