Abstract: This is a complicated crisis and has many lessons. I shall try and sort it out. Many years ago I was one of several academic economists in Britain, in US and in continental Europe who weighed the pros and cons of proposals for monetary union. And some, of course, were absolutely pro or absolutely con. One of the first substantial publications on that subject goes back to my Graham (Princeton) lecture of 1971 (published by the Princeton International Finance Section in 1972). I also had a substantial chapter on it in my 1994 book, Economic Policy, Exchange Rates, and the International System.

I will look at what has happaned in the light of those discussions. A central issue is: how important is it for governments or monetary authorities to be able to influence nominal exchange rates?  In addition, there are similarities of the recent crisis with the developing country debt crisis of the eighties, and I shall make comparisons.