International Monetary Coordination

For at least a decade the volatility of exchange rates and large international capital movements have led many to conclude that the international monetary system is in disarray. Specific evidence of disarray is hard to come by, however. Two of the most widely discussed problems of the international economy, pollution and the international debt of developing countries, are not closely connected to fluctuations in exchange rates between major currencies. A third problem, trade imbalances, is reduced by exchangerate changes. Trade and economic activity continue to grow, and inflation in the major industrial countries, despite its recent rise, has been moderate since the early 1980s.