How Well Are Fluctuating Exchange Rates Working?

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Excerpt from How Well Are Fluctuating Exchange Rates Working?: Hearings Before the Subcommittee on International Economics of the Joint Economic Committee, Congress of the United State, Ninety-Third Congress, First Session, June 20, 21, 26 and 27, 1973The subcommittee met, pursuant to notice, at 10:10 a.m., in room S - 407, the Capitol Building, lion. Henry S. Reuss (chairman of the subcommittee) presiding.Present: Representatives Reuss and Moorhead, and Senator Ribicoff.Also present: John R. Karlik, professional staff member, Michael J. Runde, administrative assistant, and Geologic D. Krumbhaar, Jr., minority counsel.Opening Statement of Chairman ReussChairman Reuss. Good morning. The Subcommittee on International Economics will he in order for the first in a series of hearings on the issue of "How Well Are Fluctuating Exchange Rates Working?"Obviously, a question like this cannot be answered without denning n basis for comparison. The most apparent, such basis is the adjustable peg system that was departed from in August 1971, briefly returned to Between the conclusion of the Smithsonian agreement in December 1971 and the summer of the following year, and which progressively eroded until it was discarded in March of this year.Another possible basis for comparison in the workability of exchange rates would be the system of stable but adjustable rates envisioned by the Committee of Twenty ministers at their last meeting. But since the practical aspects of such a system have not yet been determined, we can only guess about the effects of a shift from fluctuating rates to another regime.Focusing on the questions (a) of how well fluctuating exchange rates arc working and on the related issue (b) of what sort of guidelines should he established to regulate central bank intervention in exchange markets is particularly appropriate now for a number of reasons.First, despite the float, the dollar continues to slip in exchange markets even after the President's announcement last Wednesday of his new anti inflationary measures. One wonders whether these current disturbances are in fact less disruptive under fluctuating rates than they would have been under previous fixed-rate arrangements.Second, the point has been made that perhaps floating rates will be with us, if not forever, at least for a good long time.About the PublisherForgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.comThis book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully, any imperfections that remain are intentionally left to preserve the state of such historical works.