Word: franc
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...monetary crisis abated last week, European statesmen were pleasantly surprised at the relative mildness of its immediate economic after effects. Thanks mainly to France's severe austerity program, the franc regained some of its strength, and the free world's finely balanced monetary system was spared, at least for the moment, a major upheaval (see BUSINESS). But the political consequences of the crisis continued to reverberate in half a dozen capitals, The West Germans had defended the Deutsche Mark against the combined efforts of France, Britain and the U.S. to bring about the mark's upward revaluation...
...fellow Europeans, but it was slightly disingenuous. West Germany's economic primacy in Europe is a fact, and so is the political leverage that goes with it, whether exercised or not. Charles de Gaulle's defiant and determined effort to preserve the parity of the franc cannot mask the reality of France's diminished stature. In order to stop the outflow of francs, France is now sealed behind a monetary barrier, deprived of much of the economic freedom that De Gaulle has used in the past to act as arbiter of Europe and counterweight to West Germany...
...quotas or similar nontariff barriers on steel, textiles, footwear and dozens of other products. The temptation to erect trade barriers is seductive. For somehow, the U.S. must end or at least substantially reduce its persistent balance of payments deficit; otherwise the dollar may face the same pressures as the franc and the devalued pound...
...Expand international monetary reserves, which have become too thin to support the expanding volume of world trade. Since the recent humbling of the franc, France may be more willing than before to support the quick creation of the "special drawing rights." The SDRs are a form of "paper gold" that would be dispensed by the International Monetary Fund to supplement real gold, dollars and pounds in bankrolling trade and investment...
...Revalue certain currencies. Among the undervalued currencies at present are the mark, the Swiss franc and probably the Italian lira and the Dutch guilder. Many financial experts believe that they should all be scaled slightly upward. The overvalued currencies-generally those that cannot buy as many goods and services at home as abroad-are the dollar, the pound and De Gaulle's franc...