The need for international monetary stability: proposals for stabilizing exchange rates

With the end of the Cold War, the international economy is moving rapidly towards a framework of market economies. Parallels have been drawn with the end of World War II and there are growing calls for stabilization of exchange rates to promote economic integration. Stability is needed to allow for better long-term investment decisions by industries. However, flexibility is also needed to avoid permanent disequilibria. Moreover, in a framework of freedom of capital movements, speculative behavior must be discouraged. This article considers the lessons learned since Bretton Woods and new proposals for managing international exchange rates.