Reform of the international monetary system

Abstract

The key currency component of international money is the difference between total outlays and receipts that certain countries such as the U.S. and Britain have on their international transactions.It becomes available as international reserves "only to the extent that the keycurrency country incurs a balance-of-payments deficit.A sound monetary system requires the existence of a certain amount of money in circulation--just enough and not too much.Among the factors that affect the need of a country for money are: volume of production, trade and transactions, velocity of money in circulation, payment habits of the people, and credit facilities availabel to the society.It is often believed that if there is too much money in circulation--too much with respect to the production and trade of a country--inflation sets in.If, however, there is not an adequate supply of money, trade, exchange, and transactions may have to be cut.The need for adequate media of payment holds true at the level of the international economy.Just as there is a relation (within limits) between the volume of domestic transactions and the need for domestic money, so is there one between the size of international trade and the need for international money.2^Delbert A. Snider, Introduction to International Economics (Homewood, Illinois: Richard D. Irwin, Inc., 1963, Third edition), p. 507.Underline his. 2 Alvin H. Hansen, The Dollar and the International Monetary System (New York:-McGraw-Hill Book Company, 1965), ip-54.considerably.It further attempts to project the future of these variables and the consequences should the present situation be left to itself.Chapter VIII will then try to combine the findings of the previous theoretical and statistical assertions.The objective is to help not only to understand the diag nosis of the problem but also to aid in choosing among different solutions.The chapter will set up criteria for success and in its light to judge the acceptability of various proposals.The chapter will also include the opinion of the writer and hopes to focus attention on the directions which may have a higher probability of success.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 55 citations exist upstream.