The conclusion is that the evolutionary process will not lead to acceptable reform, much less optimal reform35, although an exception may be needed in cases where dogmas stand in the way of change that has become inevitable, as recently in the area of exchange rates. Nor will it give us the opportunity to see more clearly, in quieter times, when we hope, how to solve the problems we face. After an in-depth historical study of the Mertens theme, it is concluded that, although it made no sense, this formula was taken up by the Bureau. The outlines of the reform, the Committee`s latest, though non-binding, document, contain almost identical phrases on “stable but adjustable values” and “floating rates in particular situations”. This reflected President Morse`s ruling that it would be impossible to make progress in the area of exchange agreements within the framework of the timetable he himself has set. The fundamental importance of the Jamaican agreement is threefold. First, the Ministers finally acknowledged that the international monetary agreements had indeed made fundamental changes and based their agreements on the real situation and not on what they hoped for in the future. Second, they legalized the real situation by changing the Fund`s articles to align it with them. Third, they have accepted a number of changes that will significantly improve the functioning of the Fund, but will most likely have very little impact on the functioning of the monetary system itself. A fourth important element, although not formally decided, is the clear desire to maintain the Fund`s code of conduct in international monetary relations, in particular the prevention of restrictions and the devaluation of the competitive exchange rate and the continuation of the Fund as a centre for international monetary cooperation and consultation. In the early 1980s, the value of the U.S.
dollar increased, pushing up U.S. export prices, increasing the trade deficit. To address imbalances, five of the world`s largest economies met in September 1985 to find a solution. The five countries were Great Britain, France, Germany, Japan and the United States; this group is known as the “Group of Five,” which has been reduced to the G5. The 1985 agreement, called Plaza Accord because it took place at the Plaza Hotel in New York, focused on reducing the value of the U.S. dollar through joint efforts. However, the revival of the gold standard was short-lived due to the Great Depression that began in the late 1920s. The Great Depression was a global phenomenon.
In 1928, Germany, Brazil and the Southeast Asian economies were depressed. In early 1929, the economies of Poland, Argentina and Canada contracted and the U.S. economy followed in mid-1929. Some economists have suggested that the biggest factor linking these countries was the international gold standard they believe has extended the Great Depression. The gold standard has limited the monetary policy flexibility of each country`s central banks by limiting their ability to expand the money supply. Under the gold standard, countries could not extend their money supply beyond what the gold reserves in their safes allowed. In addition, reserve regimes called the gold market standard (or the gold-dollar standard, to the extent that the dollar was the largest national currency) were vulnerable to well-known instability. At first, the balance sheet of the reserve centre, that is, the country whose currency is accumulated by other countries in their foreign exchange reserves, is strong.