ABSTRACT
THE INTERNATIONAL Monetary Fund as established by the Bretton Woods Agreements is a substitute for the old gold standard, and an alternative to both a system of completely free exchange rates and a system of extreme exchange control. In other words, the Fund is a mixed standard embodying within itself some features of the gold standard and the paper standard It represents an attempt at “an improved system of International Currency,” in Keynes’ words. We are primarily interested in those aspects of the Fund which have a direct bearing upon the external value of currencies. In this chapter, therefore, we shall deal with the theoretical basis of the determination of exchange rates under the Fund, and with its practical implications for international currency relations and domestic welfare.
