Some Evidence on the Comparative Uncertainty Experienced under Different Monetary Regimes

The TWENTIETH century has produced diverse monetary experience This experience can be organized in several different ways. One emphasizes the role of gold in international monetary arrangements Early in the century, domestic monies of major trading countries were convertible into gold at a preestablished fixed price, and gold coins circulated. Currently, few governments set the price of gold and there is no formal requirement on governments m major trading countries to exchange gold for currency or currency for gold. This is a relatively recent phenomenon, and some prefer to return to a fixed, guaranteed price of gold,1 A second type of organization focuses on the arrangements for exchanging a country's currency for other currencies and particularly on the choice between fixed and fluctuating exchange rates. The choice of exchange regime permits a country to seek internal or external stability in the value of its currency. Major trading countries now either permit exchange rates to be determined by market forces or adjust the rates frequently to reflect market forces. Most do not achieve either internal or external stability.