ABSTRACT
I deplored 30 years ago (in 1957) the restoration of the 'gold-exchange standard' anchored to the use of a few national currencies (primarily the dollar) as major units of account in international contracts, settlements and reserve accumulation by the Central Banks and, as a consequence, by commercial banks and other major international transactors. I warned that such a system was unviable in the long, or even medium, run since it would tend to feed the reserve increases needed to finance the growth of world transactions through a continuous expansion of liabilities for the reserve-centre countries, exceeding the feasible growth of the gold holdings available to preserve the convertibility of their currency. I proposed, therefore, to create a truly international reserve instrument to replace gradually gold as well as reserve currencies: reserve deposits in the International Monetary Fund, enabling it: (1) to meet the requirements of feasible non-inflationary growth of world trade and production through the expansion of its loans and investments portfolio; and (2) to earmark this expansion for the financing of agreed high-priority objectives, including among others the development of the less developed countries of the Third World.
