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As soon as SDRs were instituted, the Bretton Woods arrangements began to unravel. While some observers noted that SDRs could not save the Bretton Woods system and were therefore doomed to irrelevance, others—in both the private and public sector—noted that they could serve a useful role, including in the provision of much‐needed liquidity to developing countries. The experience of a nascent and successful private market in SDRs is also an important but hitherto neglected attribute.

The chapter by Carvalho explores the accumulation of international reserves as a defensive strategy, as well as the reasons and limitations of their “self‐insurance” function. Conceptually, countries demand reserves of foreign currencies for a similar set of reasons to those which explain why individuals demand liquidity. However, while individuals hold liquid assets primarily to effect transactions, countries do it mostly for precautionary reasons. Again, as in the case of individuals, the stronger the demand for money, the harder it is to obtain liquidity in public sources and money markets. The chapter notes that international liquidity provision remains as important now as it was in the recent past. Carvalho argues that the best alternative would clearly be an international monetary system where a new international currency could be created according to global liquidity needs, as well as for emergency liquidity facilities to protect countries from adverse temporary external shocks.

Despite the significant economic and institutional progress experienced by the main economies of the region over the last decade or so, Latin America still experiences substantial macroeconomic instability. Replacing the chronic domestic imbalances of the past, much of this instability stems from the occasional but sharp tightening of a country's access to international financial markets. Facing this scenario, both the private and the public sectors are compelled to design an appropriate international liquidity management strategy. Unfortunately, although this is not a daunting task at the microeconomic level (i.e., given prices), there is still very limited understanding of its macroeconomic counterpart. This chapter attempts to shed some light on this issue, drawing from some of the author's recent theoretical and applied work in this area. It addresses three sequential questions: (1) Why is there a need for decentralized and centralized international liquidity management? (2) What are the types of structural and macroeconomic policies that a government should pursue, even if the private sector is using socially efficient prices in deciding its international liquidity position? (3) When and how should the government attempt to force the private sector to increase its international liquidity position?

This chapter reviews the main features of India’s integration with the global economy and examines India’s stance on global economic issues. Since 1991, India’s trade and foreign investment flows have more than trebled as a proportion of GDP, consequent upon the liberalization of various restrictions. The effects on productivity and growth have been highly favourable. Instability has been avoided by retaining some capital controls on ‘hot money’. On international monetary issues, India has no axe to grind. It should use this neutral status to demand better mechanisms to adjust deficits and surpluses of key countries, and better arrangements for provision of international liquidity. In the trade arena, India needs urgently to fashion a coherent response to the global trend towards mega-regional trade agreements. Non-engagement runs the risk of leaving India vulnerable to discrimination, and exclusion from rule-making on ‘behind the border’ issues.

Robert Triffin was both an eminent academic and an influential policy adviser, especially to Jean Monnet and the European Commission. Based on original archival research and interviews, this chapter shows Triffin’s central role as the ‘arch monetarist’ in the debates on European monetary integration. In Triffin’s view, the so-called ‘own-house-in-order’ approach, very influential in Germany, was not sufficient for a sustainable international monetary system. In order to tackle the flaws inherent in the system, Triffin pursued a two-pronged strategy with proposals for global reform and, as he doubted the feasibility of such reform, a regional approach. After the Treaty of Rome, he developed proposals for a European Reserve Fund and a European currency unit, pushing forward the ECU as a parallel currency. While many of his ideas were rather utopian, they were influential in shaping the debates and preparing minds for the euro.