Choice of a monetary system 69 Controversy over the choice of a monetary regime Simply stating the criteria by which alternative international monetary re- gimes should be judged is not the same as determining which one dominates the others,even if the criteria could be fully quantified.Controversy over the choice of an international monetary regime arises in five separately identifiable categories: (1)understandably different preferences over the different distributional implica- tions,actual or perceived,of alternative regimes,(2)different weights attached to the various criteria when compromises must be made between them,(3)different national economic circumstances,even when preferences regarding the criteria are similar,(4)disagreement over the effectiveness of alternative means to achieve agreed ends,and (5)uncertainty about the trustworthiness of other countries with regard to their behavior within any chosen regime.Each of these sources of controversy deserves extended comment,but it is only possible to touch on them lightly here. Distribution Disagreements arising from different distributional implications are perhaps the most straightforward source of controversy,although even here there is much disagreement about what actually are the distributional implications of alternative regimes.Several kinds of gain arising from alternative monetary regimes can be identified. First,there is the question of seigniorage.Traditionally,seigniorage is the gain that accrues to the mint arising from any difference between the commodity value of the materials going into a coin and the monetary value of the minted coin. Strictly speaking,seigniorage is the difference net of the costs of minting,and under a competitive regime of free access to the mint seigniorage will be zero.In the course of time,governments asserted a monopoly over the power to coin money and restricted coinage,and seigniorage-in effect,monopoly rents-accrued to national governments. By analogy,we can ask what happens to the seigniorage,if any,arising from the use of a particular reserve asset under alternative international monetary regimes.3 The seigniorage under a gold standard regime accrues to the owners of gold mines,in the form of greater intramarginal rents on the production of gold than would be the case in the absence of monetary demand for that metal.Not surprisingly,among nations the Union of South Africa and the Soviet Union have been the two most consistent supporters of returning to gold as the principal international reserve asset;these two countries are the first and second largest Herbert G.Grubel."The Distribution of Seigniorage from International Liquidity Creation," and Harry G.Johnson,"A Note on Seigniorage and the Social Saving from Substituting Credit for Commodity Money,"in R.A.Mundell and A.K.Swoboda,eds.,Monetary Problems of the International Economy (Chicago:University of Chicago Press,1969),pp.269-82,323-29. This content downloaded from 211.80.95.69 on Mon,24 Jun 2013 04:23:40 AM All use subject to JSTOR Terms and ConditionsChoice of a monetary system 69 Controversy over the choice of a monetary regime Simply stating the criteria by which alternative international monetary re￾gimes should be judged is not the same as determining which one dominates the others, even if the criteria could be fully quantified. Controversy over the choice of an international monetary regime arises in five separately identifiable categories: (1) understandably different preferences over the different distributional implica￾tions, actual or perceived, of alternative regimes, (2) different weights attached to the various criteria when compromises must be made between them, (3) different national economic circumstances, even when preferences regarding the criteria are similar, (4) disagreement over the effectiveness of alternative means to achieve agreed ends, and (5) uncertainty about the trustworthiness of other countries with regard to their behavior within any chosen regime. Each of these sources of controversy deserves extended comment, but it is only possible to touch on them lightly here. Distribution Disagreements arising from different distributional implications are perhaps the most straightforward source of controversy, although even here there is much disagreement about what actually are the distributional implications of alternative regimes. Several kinds of gain arising from alternative monetary regimes can be identified. First, there is the question of seigniorage. Traditionally, seigniorage is the gain that accrues to the mint arising from any difference between the commodity value of the materials going into a coin and the monetary value of the minted coin. Strictly speaking, seigniorage is the difference net of the costs of minting, and under a competitive regime of free access to the mint seigniorage will be zero. In the course of time, governments asserted a monopoly over the power to coin money and restricted coinage, and seigniorage-in effect, monopoly rents-accrued to national governments. By analogy, we can ask what happens to the seigniorage, if any, arising from the use of a particular reserve asset under alternative international monetary regimes.3 The seigniorage under a gold standard regime accrues to the owners of gold mines, in the form of greater intramarginal rents on the production of gold than would be the case in the absence of monetary demand for that metal. Not surprisingly, among nations the Union of South Africa and the Soviet Union have been the two most consistent supporters of returning to gold as the principal international reserve asset; these two countries are the first and second largest 'Herbert G. Grubel. "The Distribution of Seigniorage from International Liquidity Creation," and Harry G. Johnson, "A Note on Seigniorage and the Social Saving from Substituting Credit for Commodity Money," in R. A. Mundell and A. K. Swoboda, eds., Monetary Problems of the International Economy (Chicago: University of Chicago Press, 1969), pp. 269-82, 323-29. This content downloaded from 211.80.95.69 on Mon, 24 Jun 2013 04:23:40 AM All use subject to JSTOR Terms and Conditions