Introducing competition to the global currency markets

The global capital markets are inefficient and imperfect, ie unstable, subject to overshoot, and with excessive transaction costs, unaccounted externalities, and monopolistic characteristics. A social innovation is proposed: a new foreign exchange facility to introduce competition, lower transaction and external costs, make the capital markets fair and more accessible, and produce revenues for further harmonizing currency regulations, reducing criminal behaviour, and other legitimate purposes. National governments, finance ministers, and central banks with ad hoc policies to defend their currencies and domestic policy options are offered new tools to regain some of the sovereignty they lost in the 1980s when international capital markets were deregulated. National policy makers can no longer tell their voters that the loss of domestic safety nets and the exposure of their most vulnerable citizens is an inevitable price of maintaining 'global competitiveness'. Copyright (C) 1996 Elsevier Science Ltd