Is it time for a world currency?

There have been several proposals to reduce the observed volatility of flexible exchange rates. The paper reviews two recent opposite views on the appropriateness of a common world currency for this purpose. Referring to an adequately formulated theory of world money, it is shown that there is presently no alternative to a flexible exchange rate system. This system might, under specific conditions, gradually evolve into a world monetary system with a global currency. Developing some structural principles of the world economy the paper also explains some hitherto unexplained features in the development of international monetary relations.