| Abstract: | Summary This article discusses in the first place the functioning of floating exchange rates; the tendency to volatility and to unnecessary
fluctuations is explained. The conclusion is drawn that the authorities of the main countries should cooperate in exchange
rate policies that would bring about a greater stability in exchange rate movements. The article then sketches the historical
development which brought us to the present multiple reserve currency system. The functioning of this system is analysed and
some suggestions are presented for a more satisfactory management of this system by central banks, possibly along guidelines
tobe developed in the IMF. Finally some possibilities are outlined to develop a stabler and better system in the future by
creating a more attractive market-oriented SDR-substitution account in the IMF.
This article is based on important parts of two speeches which I have given recently: ‘The changing monetary system; evolution
and reform’ (20 years' anniversary Central Bank of Malaysia, Feb. 1979) ‘Managing reserves in the 1980s’ (Second International
Monetary Conference, Philadelphia, Nov. 1980). |
