ABSTRACT
The international community would effectively control most of the creation of world reserves through the Special Drawing Rights (SDR) system, and would avoid the risk of a destruction of world reserves through expanding the SDR system to consolidate the dollar overhang. The central institutional role of the International Monetary Fund would be greatly enhanced by the new regimes for liquidity and adjustment, in itself a major advance in internationalizing world economic management. Many countries at the stage of history would probably opt for national exchange-rate flexibility. Payments equilibrium would be easier to maintain under the new regime, and the other goals are desirable for purely domestic reasons as well. Under the new regime the United States would get annual unfettered SDR allocation of perhaps $1.5 billion annually. The adjustment initiatives required of the United States would of course be reduced by the increased pressure that the new system would place on other countries to change their exchange rates in cases.
