Abstract
The present international monetary system is not optimal; it would be better to adopt a system of target zones for the currencies of the Group of Seven countries. But the world is not ready for reform. The economic obstacles can be adduced by examining the crises of the Bretton Woods system in 1971–73 and the crises of the European Monetary System in 1992–93. The EMS crises do not prove that exchange-rate targeting cannot succeed. They do prove that adjustability should not be sacrificed to credibility, that asymmetric systems are not always robust, and that we need more policy instruments to pursue more policy targets, such as exchange-rate stability.
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