The Consistency Objective

The efficiency objective reflects the common policy interest that all countries have in promoting the highest possible level of global economic welfare. From this stems the strong element of cooperation that exists in international monetary relations. However, maximization of technical efficiency is not the only policy interest that countries have. Governments are also concerned to influence the distribution of economic welfare, both internationally and intra- nationally, as well as of national prestige and decision-making authority in monetary affairs. These concerns introduce a second element into international monetary relations—an element of competition—that can lead to serious policy conflict among governments if not subject to some form of control. The structure of the international monetary order must also ensure some minimum degree of consistency among the policies of nations. The purpose of this chapter is to examine the relationship between the monetary order and this element of competition in monetary relations.

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