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Why the interest in reforming the International Monetary System?

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Author Info

  • Jane Sneddon Little
  • Giovanni P. Olivei

Abstract

The recent spate of severe financial crises has provoked an interest in international monetary reform not seen since the breakdown of the fixed exchange rate system 30 years ago. Indeed, the crises have forced both academic economists and policymakers to question some of their most basic assumptions about the appropriate design of the international monetary system. This article was the introductory paper at the Federal Reserve Bank of Boston's conference on "Rethinking the International Monetary System," held in June 1999. The article reviews recent changes in the economic environment that have provoked the interest in reform. It goes on to explore how policy choices concerning four key aspects of the international monetary system-exchange rate regimes, treatment of capital flows, international lender of last resort facilities, and policy coordination-interact to support or undermine national efforts to achieve stable economic growth. The authors posit that current arrangements create unpalatable policy choices for many nations and that inadequate surveillance and policy coordination and the ambiguities surrounding international rescue programs contributed to recent crises. While widely advocated improvements in transparency and governance and the market forces they engender should encourage more mature financial systems and better macro policies, the authors suggest that the ongoing struggle to achieve stable growth points to the need for more fundamental reform.

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Bibliographic Info

Article provided by Federal Reserve Bank of Boston in its journal New England Economic Review.

Volume (Year): (1999)
Issue (Month): Sep ()
Pages: 53-84

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Handle: RePEc:fip:fedbne:y:1999:i:sep:p:53-84

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Keywords: International finance;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Tesar, Linda L. & Werner, Ingrid M., 1995. "Home bias and high turnover," Journal of International Money and Finance, Elsevier, vol. 14(4), pages 467-492, August.
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  10. Maurice Obstfeld & Alan M. Taylor, 1998. "The Great Depression as a Watershed: International Capital Mobility over the Long Run," NBER Chapters, in: The Defining Moment: The Great Depression and the American Economy in the Twentieth Century, pages 353-402 National Bureau of Economic Research, Inc.
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  24. Michael D. Bordo, 1990. "The Lender of Last Resort: Some Historical Insights," NBER Working Papers 3011, National Bureau of Economic Research, Inc.
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  31. Reinhart, Carmen & Reinhart, Vincent, 1998. "“Some Lessons for Policy Makers Who Deal with the Mixed Blessing of Capital Inflows,”," MPRA Paper 7123, University Library of Munich, Germany.
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  36. repec:fth:inadeb:402 is not listed on IDEAS
  37. Michael Klein & Giovanni Olivei, 1999. "Capital account liberalization, financial depth, and economic growth," Working Papers 99-6, Federal Reserve Bank of Boston.
  38. Levine, Ross, 1996. "Financial development and economic growth : views and agenda," Policy Research Working Paper Series 1678, The World Bank.
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Citations

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Cited by:
  1. George G. Kaufman, 2000. "Banking and currency crisis and systemic risk: lessons from recent events," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q III, pages 9-28.

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