Current International Monetary Arrangements

The decision in February 1972 to let the dollar float more or less freely on the exchange markets must be regarded as a decision to accept the best available alternative. Those committed to some grand scheme for the reconstruction of the monetary system and those opposed to free markets have recognized* at least for the present, that the likely alternative to fluctuating exchange rates is the proliferation of controls on capital movements and increased controls.on trade and payments« Since the principal benefit claimed for fixed exchange rates by its proponents is that fixed rates encourage trade, there is not much point to restricting trade to protect fixed exchange rates. Any argument to the contrary would seem to confuse means with ends.