Whereas part 4 was devoted to a discussion of monetary instability because of the presumed lack of control over the volume of international liquidity, part 5 is focused on monetary turbulence allegedly arising from an evolution of the monetary system and, more specifically, from a drift toward a multiple-currency reserve system.
The presumption that a monetary system based on more than one reserve asset is inherently unstable has a long history. The demise of the dollar as the only reserve asset, accompanied by the rise of a few other national currencies as components of official reserve holding, a renewed effort to promote the SDR (special drawing rights), and the emergence of the European Monetary System gave rise to increased apprehensions about the future stability of international monetary arrangements and contributed to an intensified search for alternative solutions. Papers presented in part 5 blend an evaluation of prospects for alternative future monetary arrangements and an assessment of their respective advantages and disadvantages.
Edward Bernstein focuses on the future of the dollar and other national currencies in the role of international reserve assets. He also discusses the future of the SDR, especially in the light of a proposal to establish a Substitution Account at the International Monetary Fund. Michele Fratianni concentrates on an arrangement based on regional currency blocs as exemplified by the European Monetary System.
Among the commentators, Helen Junz focuses specifically on the merits of a Substitution Account proposal, and Giovanni Magnifico addresses a number of points raised in Fratianni's paper. Ralph Bryant discusses the prospects for alternative monetary arrangements against a broader background of world economic and political evolution, and Fritz Machlup evaluates renewed suggestions to restore the monetary position of gold.