ABSTRACT
THE GLOBAL monetary system—which consists of exchange arrangements sponsored by the International Monetary Fund (IMF), international liquidity, and issues concerning balance-of-payments adjustments—went through a major restructuring in the early 1970s. It has grown rapidly, become large, efficient, and competitive, and gained in breadth, depth, and resiliency. It has developed a unique institutional setup, with markets and participants throughout the world. To date, the new system had performed unevenly—occasionally failing to provide sufficient exchange-rate stability and proper balance-of-payments adjustments. However, the system seems sufficiently stable to withstand several challenges posed by the external debt problems of the less developed countries (LDCs) since the early 1980s.
