Growing global imbalances threaten to induce a collapse of the
dollar, which could in turn produce a severe recession in the
rest of the world. This crisis could force countries to say
"never again" and search for a system to prevent similar
disasters. The system that could do so is a reference rate
system—where countries' authorities are forbidden from
intervening in order to push the exchange rate too far from what
is termed the "reference rate." It could help a country's
authorities manage its exchange rate to avoid large
misalignments, assist the private sector in forming more
dependable expectations of future exchange rates and thus to
manage their businesses more efficiently in a world of floating
exchange rates, and aid the International Monetary Fund in
designing and managing an effective system of multilateral
surveillance. The world economy would function better as a
result, with less chance of the global imbalances leading to a
world recession. UK and European Residents: Purchase this book
through