Monetary Reform in an Uncertain Environment

The 20thcentury has produced a rich array ofmonetary experience. The experience can be organized in several different ways. One emphasizes the role ofgold in international monetary arrangements. Early in the century, domestic monies of major trading countries were convertible into gold at a pre-established fixed price, and gold coins circulated. Currently, governments do not set the price of gold, and there is no formal requirement on governments to exchange gold for currency or currency for gold.’ This is a relatively recent phenomenon, and there are some who prefer to return to a fixed, guaranteed price. A second method 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. Major trading countries nOw either permit exchange rates to be determined by market forces or adjust the rates frequently to reflect market