This paper describes and analyzes forward market systems with varying degrees of sophistication, and it assesses them from the viewpoint of a smaller industrial or developing country asking itself how it could institute such a system, or how it could further develop an existing system in a way consistent with its institutional and macroeconomic structure. All industrial countries except Iceland now have forward exchange markets in which the rate is determined by the market. Forward markets that have been liberalized in several countries in the 1980s have matured quickly. There are several variants of market-determined systems which could be envisaged. An auction market could be devised for forward transactions, but is unlikely to be practical, because the supply of forward exchange probably may not be determined in advance sufficiently accurately. As the last stage of its development, the market could be extended from underlying commercial transactions to forward transactions of a purely financial character, a process that is taking place in most of the few industrial countries that have retained regulated forward systems. Development of a forward market is not a panacea for incorrect financial policies. In fact, cultivation of the market will require the adoption and maintenance of realistic financial policies.

This chapter reviews recent economic developments and economic prospects in which the emergence of the principal imbalances is traced, and their persistent character highlighted in the Federal Republic of Germany. On macroeconomic policies, while one might quibble about the rate of expansion of the money supply or the timing of tax reduction and reform, the paper does not find major errors in the formulation or implementation of policies that would account for the principal economic imbalances. The need to reduce rules and regulations, which act to limit the flexibility and dynamism of the German economy, has been reinforced by the objective of fully liberalizing trade in services within the European Community by 1992. The banking industry is exempt from the provisions of the antitrust law, which prohibits restraints on competition, price collusion, and other collusive agreements. Among economists, there is a broad agreement that structural reforms in Germany would greatly improve economic performance and contribute to external adjustment.

This paper discusses various developments and perspectives of the European Monetary System (EMS). There have been three phases in the development of the EMS: from its beginning in March 1979 to March 1983, can be seen as a phase of trial and orientation; from March 1983 to 1987, can be described as one of consolidation; and The Basle/Nyborg agreement marked the end of the consolidation phase, characterized by the striving for stability, the emergence of the deutsche mark as the anchor currency, and the predominance of intramarginal intervention in partner currencies. EMS has allowed simultaneous progress toward external and internal stability. The EMS Agreement provided for fluctuation margins offering some flexibility and for the possibility of central rate changes, which could compensate for diverging monetary policies. As divergences were narrowed, central rate adjustments could be small so as not to affect market rates; thus minimizing the potential for destabilizing capital flows.

Provides an in-depth overview of the Federal Reserve System, including information about monetary policy and the economy, the Federal Reserve in the international sphere, supervision and regulation, consumer and community affairs and services offered by Reserve Banks. Contains several appendixes, including a brief explanation of Federal Reserve regulations, a glossary of terms, and a list of additional publications.

Provides a state-of-the-art overview of international trade policy research The Handbook of Global Trade Policy offers readers a comprehensive resource for the study of international trade policy, governance, and financing. This timely and authoritative work presents contributions from a team of prominent experts that assess the policy implications of recent academic research on the subject. Discussions of contemporary research in fields such as economics, international business, international relations, law, and global politics help readers develop an expansive, interdisciplinary knowledge of 21st century foreign trade. Accessible for students, yet relevant for practitioners and researchers, this book expertly guides readers through essential literature in the field while highlighting new connections between social science research and global policy-making. Authoritative chapters address new realities of the global trade environment, global governance and international institutions, multilateral trade agreements, regional trade in developing countries, value chains in the Pacific Rim, and more. Designed to provide a well-rounded survey of the subject, this book covers financing trade such as export credit arrangements in developing economies, export insurance markets, climate finance, and recent initiatives of the World Trade Organization (WTO). This state-of-the-art overview: Integrates new data and up-to-date research in the field Offers an interdisciplinary approach to examining global trade policy Introduces fundamental concepts of global trade in an understandable style Combines contemporary economic, legal, financial, and policy topics Presents a wide range of perspectives on current issues surrounding trade practices and policies The Handbook of Global Trade Policy is a valuable resource for students, professionals, academics, researchers, and policy-makers in all areas of international trade, economics, business, and finance.