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579 Annals Am. Acad. Pol. & Soc. Sci. 9 (2002)

handle is hein.cow/anamacp0579 and id is 1 raw text is: PREFACE The exchange rate and financial crises of the 1990s and early twenty-first century have moved the debate about how to reform the international mone- tary system to center stage in international fora and the front pages of news- papers. Beginning with the speculative attacks against the currencies in the European Monetary System in 1992-1993 and continuing with the attacks against the Mexican peso in 1994-1995, the Thai baht in 1997, the Russian ruble in 1998, the Brazilian real in 1999, and the Turkish lira in 2001, increasing concern with the operation of the international financial system has emerged. Scores of articles and books have been published addressing the issue of how to, and whether to, fix the international monetary system. The culmination of this concern occurred following the outbreak of the Mexican crisis when the G7 industrial countries launched an effort to reform the inter- national financial architecture, an effort that was accelerated in the after- math of the Asian crisis. The point of departure of the architecture exercise has been the view that the present international monetary system has worked fairly well, though much can be done to strengthen the system to help keep crises from occurring and to resolve crises should they occur. The following specific areas have been at the center of the debate about the architecture: reform of the exchange rate arrangements, particularly whether intermediate regimes between floating rates and hard pegs are viable in a world of highly mobile capital; the role of the International Monetary Fund and other international institutions in cri- sis resolution; the role of capital controls in preventing or delaying (so that the authorities can buy time to implement necessary policies) crises; and the role of the private sector in crisis resolution. Where, then, do we stand in the international monetary reform debate? What are the viable exchange rate arrangements at the beginning of the twenty-first century? This issue of The Annals takes stock. It brings together both leading proponents of reform and leading proponents of the existing regime. The articles address the issue of why recent exchange rate and finan- cial crises occurred, the lessons learned from those crises, and the implica- tions of those lessons for international monetary reform. By bringing together an eminent group of contributors, we hope that a wider group of the populace can make more informed judgments about a critical issue. Barry Eichengreen argues that emerging economies can control inflation by targeting it directly rather than using the exchange rate as an anchor for their monetary regimes. W. Max Corden asserts that the effects of the 1997- 1998 Asian financial crisis would have been less severe if the economies con- cerned had rigidly fixed or freely floating exchange rates rather than adjust- able pegs. Martin Wolf agrees that the middle ground cannot hold and says that the Eurozone countries should consider a ceiling for the value of the euro against the dollar in the longer term. Harris Dellas, P.A.V.B. Swamy, and 9

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