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The Development and Reform of the Modern International Financial System


  • L. Randall Wray

    (The Levy Economics Institute)


The international financial system might be said to be in crisis. It requires frequent intervention by central banks and other national and international bodies to reduce fluctuations of currencies. It does not tend to eliminate current account deficits and surpluses; exchange rate fluctuations do not lead to movements toward balanced trade, nor do they appear to follow from flows of international reserves: some countries run persistent surpluses while others run persistent deficits. This paper first examines the functioning of the modern international financial system in order to design a reformed system that will make it to deal with some of the problems that face the international financial system today. The paper advocates reformation of the international financial system today. The paper advocates reformation of the international financial system along the lines of Keynes's famous bancor proposal. Most importantly, the reform would eliminate the current bias toward "austerity" that results from the way in which existing international financial institutions operate.

Suggested Citation

  • L. Randall Wray, 2001. "The Development and Reform of the Modern International Financial System," Macroeconomics 0108005, EconWPA.
  • Handle: RePEc:wpa:wuwpma:0108005
    Note: Type of Document - Adobe Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 65; figures: included

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    References listed on IDEAS

    1. Frank Hahn, 1985. "Money and Inflation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262580624, January.
    2. Davidson, Paul, 1972. "Money and the Real World," Economic Journal, Royal Economic Society, vol. 82(325), pages 101-115, March.
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    Cited by:

    1. FIGUERA, Stephano, 2002. "La réforme du système monétaire international : une réflexion dans une perspective keynésienne," LATEC - Document de travail - Economie (1991-2003) 2002-01, LATEC, Laboratoire d'Analyse et des Techniques EConomiques, CNRS UMR 5118, Université de Bourgogne.

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    JEL classification:

    • E - Macroeconomics and Monetary Economics

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