The stability of the 1980s

In the 1980s, the system stabilized. The Europeans, however, have by now long been working on their own currency, which should make them independent of the USdollar system. The advocates of the Special Drawing Rights and the IMF were not idle either. In 1984, economist Richard Cooper proposes a global single currency – with a common monetary policy and a common central bank. The US, Europe and Japan are to be the first nations to join.  

“Get ready for a world currency” –This was the headline of“The Economist” on January 9, 1988. In the article, the creation of a global monetary union is suggested. In this vision the IMF is to assume the role of the world central bank and its special drawing rights the role of the world currency. In the description, it is striking that the envisaged construction strongly resembles that of the later Euro zone: A system whose rules must be followed by all participating states. The Economist calls the new currency phoenix and predicts its introduction by 2018.  

“Each country could use taxes and public spending to offset temporary falls in demand, but it would have to borrow rather than print money to finance its budget deficit. With no recourse to the inflation tax, governments and their creditors would be forced to judge their borrowing and lending plans more carefully than they do today.”