Reflections on international economic and monetary problems

Abstract

Had no oil crisis occurred, a talk such as this would have been easy to plan. I would have begun by running over the series of events which ultimately led to the virtual end of the Bretton Woods system in March 1973, when shortly after the 10% devaluation of the American dollar there was a general change-over to a system of floating exchange rates, albeit with a European island of fixed parities known as the snake arrangement. The end of the old international monetary system may perhaps even be dated back to the suspension of the convertibility of the dollar by President Nixon on 15 August 1971. But in any case, between 15 August 1971 and March 1973 it was still possible to hope that a new system could be built up on that part of the old system which had remained intact and which was based on fixed parities between a number of important currencies, even though the feature of convertibility that is vital to this system in the long run, might initially have been lacking.