The currency crises of the sixties

In retrospect, the decade of sixties has witnessed substantial upheavals and achievements in the international monetary sphere. Massive flows of hot money from one country to another have stimulated international cooperation on a large scale. The two-tier gold system seems to be an unparalleled success, while the parity changes mentioned seemed to have gone a long way towards correcting unrealistic exchange rates. Perhaps the greatest achievement of the decade, however, lies in the recognition of the inherent weaknesses of the gold exchange standard and the desire to have a more rational means of increasing international liquidity. On January 1st, 1970, the first allocation of Special Drawing Rights (SDR’s )within the IMF were made. They represent for the first time a genuine credit instrument and one which will be unconnected with the fortunes of any particular country. In the distant future, they may even entirely usurp the function of dollars, sterling and gold as reserve assets; meanwhile a start has been made.