Globalization and the World of Finance

Paul Volcker addresses issues of global finance--particularly fluctuations of the value of emerging-country currencies. Full participation in the world of global finance simply isn't consistent with independent monetary policies by independent nations. Countries should work toward greater stability among major currencies by setting boundaries for fluctuations. This would be done through direct market intervention and central bank policy coordination. The aim would be to avoid the extreme fluctuations that bear on relationship to differentials in interest rates or inflation rates or to more fundamental shifts in competitiveness. This would allow emerging countries to live more comfortably with freedom of international capital movements. This article is the annual Hutchinson Lecture at the University of Delaware.