Abstract

International discussions on the damage done by exchange rate instability and possible cures started with the demise of the Bretton Woods regime and have remained on the agenda, more or less continuously, for the past 25 years. From time to time, they have been followed by action to deal with specific situations, such as the dollar appreciation in 1985 and the yen appreciation in 1995, or by more durable commitments, as in the case of the Plaza and Louvre accords of 1985 and 1987. There is a widespread consensus, however, that arrangements aimed at stabilizing major currencies have not fulfilled the expectations of the 1980s, and that governments should not waste scarce resources on activism in foreign exchange markets.