Economists have long argued that one of the advantages of flexible exchange rates is that countries become independent in their ability to formulate national monetary policy. This is clearly not the case when exchange rates are set. If country A is to maintain a fixed exchange rate with country B, A must follow a monetary policy similar to that of B. If A pursues an inflation policy where prices rise by 20% per year, while B pursues a policy of price stability, a fixed exchange rate between A and B money will prove very difficult. But with flexible exchange rates, A and B can choose each of the monetary policies they like, and the exchange rate will simply change over time to adapt to inflation differentials. Secondly, in a world which, contrary to what is thought, is increasingly dominated by the dollar, the European monetary authorities are looking for a certain counter-power and, for want of better, they have become dependent on the maintenance of a certain monetary role for gold. The U.S. authorities view gold in the same way as a competitor to the dollar, a characteristic they consider undesirable. Gold also reminds them of the last days and years of the Bretton Woods system, when they were increasingly unable to meet their obligations to convert dollars to gold and were therefore informed by their European peers of the inadequacies of their policies.
As we have seen, the real cause of the difficulties was inherent in the gold stock market system, which inevitably leads to an overvaluation of the reserve currency, an overvaluation that neither the United States nor the European authorities wanted to correct in time. The Jamaican agreement is therefore not the beginning of a new era. If so, it is the end of an effort that began with high hopes and ended with rather modest results, i.e. makeshift provisions for the most pressing problems during an „intermediate period“. But while the reconstruction of a rational monetary system must wait another day, such construction must come from some important elements that have been introduced. In 1973, European and Japanese currencies became floating currencies.