Abstract
The author reviews the disastrous history of the international monetary system. Since the end of World War II total world reserves have exploded and their distribution over time between countries has tended towards imbalance rather than away from it. An important reason is found in the role of dominant system currencies. The overvaluation of such currencies allows the issuing governments to behave irresponsibly; for instance the world's richest country, the United States, is currently also the world's biggest debtor. Such is the intellectual consensus but changing such a system is difficult, not least because current political systems have allowed it to occur. However, the end of the cold war and EMS offer new ways forward. JEL: E42, F33
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