and vice versa. An altemative approach in this model is to formulate the money supply for the world in terms of the ratio of intemational reserves to total money stock,initial shares in international erves5and initial ratiosof domestic credit to reservesd(Note that=1/1+d,where dis the ratio of reerves.)Then M=∑sR+∑dR 8M,=∑(1+d)g+gp RM=r(gR+∑dsD） E=r(oR+Edasp.)-s(1+di) 8飘，=(1+d)(+%8影）-dgo =1+d)+[1+d)g,~,+d)2k] -[d8e-(1+d,)r∑48] =1+d)rg+[1+d)-(1+d,)s] -(o+号y4o This altemative formulation.which will not be explored further here,naturally produces the The next stage in making the "monetary"model of balanceof-payments behaviour more realistic is to introduce a reserve currency country whose currency is held as a substitute for the of the reserve currency country.The total world money supply is as before the sum of reserves and domestic credit created by the individual countries;but the reserve currency role enables own domestic credit,instead ofor in addition to providing their own money by domestic credit As before we have g别=or8取+w1-g知 8=∑8+∑1-r8-8x But now the behaviour of the reserve currencyou'sreserves is determined by the relation between the growth of both foreign ad domestic demand for its money.and its domestic credit expansion.Still assuming homogeneity in money demand,we have