Just International Monetary Arrangements

As early as January 19, 1948, the press reported that the devaluation of the French franc was under consideration by the French Government as a measure to stimulate French exports. Lengthy consultations between the French Director of the Fund (Mendès-France) and other officials of the Fund gave rise to the belief that agreement would be reached whereby the Fund could approve some devaluation of the franc. However, on January 25 the Fund announced that it could not permit the devaluation and that it regretted the decision of the French Government to proceed without the Fund's permission. Following French devaluation the following day, the Fund stated that it would continue to “work with the French Government in seeking a modification of these exchange practices in order to meet French needs within the framework of the international monetary arrangements established by the Fund Agreement.” The Fund subsequently accepted a provisional adjustment in its holdings of the franc from approximately 67,940 million to 122,292 million, representing an 80 per cent increase over January 24, 1948.

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The U.S. and the emergence of flexible exchange rates: an analysis of foreign policy change

International Organization ◽

10.1017/s0020818300000667 ◽

1979 ◽

Vol 33 (1) ◽

pp. 57-81 ◽

Cited By ~ 2

Author(s):

John S. Odell

Keyword(s):

Exchange Rate ◽

Exchange Rates ◽

Policy Change ◽

Exchange Rate Flexibility ◽

Bretton Woods ◽

Mixed Regime ◽

International Monetary Arrangements ◽

Foreign Policy Change ◽

Flexible Exchange Rates ◽

The U.S

International monetary arrangements in effect since the Bretton Woods conference of 1944 underwent major changes in the early 1970s, most notably from the norm and practice of “fixed” exchange rates to a new mixed regime in which major rates are now flexible. The outcome strongly reflected the external monetary behavior of the U.S. government, which changed dramatically with the “Nixon shocks” of August 1971 and again with a second devaluation of the dollar in February 1973. Since then the U.S. has officially advocated the once-heretical policy of exchange-rate flexibility.

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