Introduction

This introduction presents an overview of the key concepts discussed in the subsequent chapters of this book. The book provides a historical analysis of the origins, functioning and collapse of modern exchange-rate regimes. It argues that systemic asymmetries in the adjustment mechanism are inherent in the International Monetary System. The book examines the revival in modern conditions of the rules versus discretion debate in the context of the narrower debate over monetary versus exchange-rate targeting. It discusses the credibility issue in the light of economic theory and the stabilisation efforts of developing economies. The book explores the main disagreements between different prescriptions concerning exchange-rate regimes using as a background, the exchange-rate prescriptions and monetary conceptions of different theorists. It deals with the dilemmas of selected Latin American countries facing different stabilisation programmes. The book focuses on the modern international financial system and examines controversial topics such as: globalisation and national policy autonomy; international capital movements; and short-term capital inflow problems.