The Sanwa Bank established the The Sanwa Research Endowment Found on International Financial Markets at The Center for Japan–U.S. Business and Economic Studies, Leonard N. Stern School of Business, New York University to provide continuing support for research on international economics and financial markets. One of the activities supported by the endowment is an annual financial award to write a monograph based on original research. The first monograph, “International Financial Integration: A study of interest differentials between the major industrial countries,” was written by Richard C. Marston, of the Wharton School of the University of Pennsylvania and published by Cambridge University Press in 1995.

The second award went to Professor Willem Buiter of the University of Cambridge, Giancarlo Corsetti of University of Rome III, and Paolo A. Pesenti of Princeton Univeristy. Each researcher gets two to three years to complete the monograph and three monographs are under preparation.

I am delighted that the second Monograph draws lessons that have much wider relevance than the 1992–93 crisis in European Rate Mechanism. The Bretton Wood System that established a period of considerable stability in exchange rates in the post-World War period ended with the Smithsonian Agreement of 1971. While the relatively higher rate of inflation in the United States made it impossible for many nations to pursue price stability and dollar parity at the same time, it was not clear that the fluctuations in exchange rate that followed were desirable.