Summary — How Important Is Control over International Reserves

This source is best read as a compact multi-author exchange rather than a single freestanding article. Its main chapter is Gottfried Haberler’s “How Important Is Control over International Reserves?”; Robert Triffin then supplies the critical counter-position, and Haberler closes with a reply. The volume’s subject is therefore not merely reserve adequacy in the abstract, but a disagreement between two contributors over whether the post-Bretton Woods, floating-rate world still required systematic international control of reserve creation.

The problem of the adequacy of international liquidity—or, better, of international monetary reserves—has been discussed almost as long as there has been serious discussion of the international monetary system.

Haberler’s opening chapter provides the historical and analytical frame. He traces liquidity anxieties through bimetallism, symmetallism, commodity-reserve proposals, Keynesian reform schemes, and postwar plans associated with Triffin and others. His central move is to argue that these proposals usually presumed stable or adjustable parities. Under such regimes, reserve shortages could appear as system-wide constraints because central banks had to defend declared exchange rates. Once generalized floating became the operative setting, however, reserve control ceased to be the master problem it had seemed under gold-standard or Bretton Woods assumptions.

For as far as I can see, almost all of the discussions of the subject (including the IMF seminar of 1970 where floating received only fleeting mention) were based on the assumption of stable, or stable but adjustable, exchange rates.

Haberler’s historical chapter also separates interwar collapse from simple indictments of the gold-exchange standard. He assigns more explanatory weight to banking failures, deflationary national policies, and the inability or refusal of countries to adjust. Bretton Woods, in his account, produced a different difficulty: par values were officially fixed but politically revisable. That made speculation rational and enlarged reserve needs, because authorities had to defend rates that markets knew might be altered.

Under the Bretton Woods system, in contrast, “complete confidence” in the existing rates was no longer possible.

The chapter’s theoretical conclusion is that international reserves affect outcomes only through national policy choices: monetary expansion or restraint, fiscal policy, sterilization, borrowing, capital controls, and intervention. Haberler therefore rejects a mechanical international quantity theory in which the global reserve stock directly determines world inflation or trade. Eurocurrency markets, OPEC balances, borrowed reserves, and intra-European support operations further blur the boundary between reserves and capital flows. His preferred IMF is not a world central bank but a surveillance and adjustment institution.

If there are official interventions in the exchange market, as there probably always will be, there is some need (or demand) for reserves.

Triffin’s contribution functions as the volume’s counter-chapter. He resists Haberler’s claim that floating rates largely displace the old liquidity problem, keeping attention on dollar-centered reserve creation, dependence on national currencies, and the need for more deliberate international monetary management. Haberler’s reply then restates the regime distinction: reserves remain useful where governments intervene, but the Bretton Woods case for central control over world liquidity no longer follows. The volume as a whole stages a dispute between Triffin’s reformist concern with reserve supply and Haberler’s insistence that adjustment, surveillance, and disciplined national policy matter more in a floating-rate era.