ABSTRACT
The Evolution of the International Monetary System. It will be well to go back for a moment to the 1930s and consider the role that the international monetary system then in operation, the gold standard with fixed exchange rates, played in the catastrophic world slump. The row between two members of the European monetary system, France and West Germany, has provided a striking example of the dangers of politicizing exchange rates and of the unworkability of a Bretton Woods-type international monetary system. In the 1950s and 1960s it became customary to discuss the problems of international monetary reform under the three headings of adjustment, liquidity, and confidence. The possibility that lack of confidence could lead to large, sudden switches between different reserve media, specifically from dollars into gold, was regarded as a major weakness of the international monetary system in the 1950s and 1960s.
