It is argued in this paper that, since economic welfare is influenced by the payments objectives pursued by countries, economists should explore the objectives that are indicated as being appropriate by welfare economics, rather than accepting objectives that have been arbitrarily specified and...

This paper constructs a simple model of the financial effects on countries in different situations of the various arrangements regarding reserve supply that were discussed during the recent negotiations on reform of the international monetary system: (1) "on demand" convertibility, (2) holding...

Increasing nervousness in world financial markets give new relevance to the long-standing issues of global current account adjustment. It reminds policymakers that this adjustment, if improperly managed, could lead to further drops in assets prices, disruptions in the global trading system, and...

It has been 80 years since John Maynard Keynes first proposed a plan that would have disciplined persistent surplus countries. But the Keynes Plan, like the subsequent Volcker Plan in 1972-74, was defeated by the major surplus country of the day (the United States and Germany, respectively), and...

Cline and Williamson update their estimates of fundamental equilibrium exchange rates (FEERs) for leading advanced and emerging-market economies. This policy brief is a sequel to Policy Brief 08-7, published last July, and is based on the latest developments in the world economy. The authors,...

In this update of estimates of fundamental equilibrium exchange rates (FEERs) for 30 major economies, Cline and Williamson report on changes in disequilibria in exchange markets since March 2009, the date to which their earlier (June 2009) calculations referred. The overvaluation of the dollar...

This policy brief updates Cline and Williamson's estimates of fundamental equilibrium exchange rates (FEERs) to May 2010 using the data to March contained in the April issue of the International Monetary Fund's World Economic Outlook. The IMF's data are updated to May by subsequent exchange rate...

Special Drawing Rights (SDRs), the reserve asset issued by the International Monetary Fund (IMF), have lately reappeared in the news. The G-20 leaders, at their recent meeting in London, endorsed a proposal to issue $250 billion in SDRs to counteract the financial crisis, while the governor of...

More than a dozen countries, including Brazil, China, India, Japan, and Korea, have been intervening in the foreign exchange market to prevent their currencies from appreciating. There are fears that the second dose of quantitative easing in the United States (dubbed QE2) may worsen currency...