Reference Rates and the International Monetary System

To avoid global imbalances that could lead to the collapse of the dollar, Williamson (Peterson Institute, Washington, DC) proposes some variant of a reference rate system, under which countries could not push the exchange rate too far out of alignment with a reference rate. Such a system would benefit the global economy by stabilizing private sector expectations of future exchange rates and assisting International Monetary Fund monitoring. The analysis concludes with a hypothetical history of how an effective reference rate system might have impacted recent macroeconomic issues. Annotation c2007 Book News, Inc., Portland, OR (booknews.com)

John Williamson, senior fellow (retired), was associated with the Institute from 1981 to 2012. He was project director for the UN High-Level Panel on Financing for Development (the Zedillo Report) in 2001; on leave as chief economist for South Asia at the World Bank during 1996–99; economics professor at Pontifica Universidade Catolica do Rio de Janeiro (1978–81), University of Warwick (1970–77), Massachusetts Institute of Technology (1967, 1980), University of York (1963–68), and Princeton University (1962–63); adviser to the International Monetary Fund (1972–74); and economic consultant to the UK Treasury (1968–70).