160 MODERN MONETARY SYSTEMS 
this would be a highly problematical process, as a dis- 
located exchange, subject as it is to all the imponderable 
reactions of speculation, will seldom recover with a steady 
upward movement. Or else it would be possible to set 
about devalorising the national monetary unit before 
abolishing forced currency. Thus, for instance, once the 
franc was defined as having one-third of the content of 
fine metal which it has at present, it would have a new 
and much lower parity which would enable notes to be 
converted at the rate of one gold franc to each paper franc, 
and the return to parity would not create too violent a 
disturbance in the purchasing power parity. But it 1s un- 
necessary to emphasise the seriousness of such a decision. 
Moreover, the mere suppression of forced currency, 
even if it is preceded by a change in the definition of the 
currency, would still have the effect of making notes con- 
vertible for all comers and for any purpose, and of putting 
back into circulation as ordinary currency gold coin which 
can continue without serious disadvantages to be replaced 
by notes in internal circulation. Now quite apart from the 
risk of hoarding which is to be feared after a period of 
disturbance when public confidence has been seriously 
shaken, the result of this measure is considerably to reduce 
the metal reserve of the Bank, using for the quite subsi- 
diary purpose of an internal instrument of exchange that 
part of the national volume of currency which ought 
always to be available to settle any debt balance payable 
abroad. 
A number of precedents connected with the return to 
a stable exchange based on gold (gold exchange standard) 
which have occurred since the end of the 19th century 
point the way to another method which is in fact much 
simpler and more logical. With an internal silver or paper 
currency, but one which is convertible at a fixed rate for 
payments abroad, it is possible to give to a given volume 
of gold its maximum effectiveness, since it is entirely set 
aside for payments abroad. On the other hand, in fixing the 
rate of conversion the purchasing power parity ruling at the 
time when the system is adopted can be taken into account; for