International money and credit : the policy roles PDF
Preview International money and credit : the policy roles
International Money and Credit: The Policy Roles ©International Monetary Fund. Not for Redistribution This page intentionally left blank ©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
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