payments, as indicated by competitiveness and other long-term factors. Thepersistent overshooting and misalignoent involve signiflcant costs as, for example, owing to srong signals and uncertainties, investment decisions are made mqredifficult, trade frictions are exacerbated and protectionism is encouraged. 100. Developing countries in particular have experienced greaEer difficulties underthe system of float.ing rates. Their economies are Less diversified and frequentlylack the necessary institutional arrangenents to protect them from volatility anduncertainty, On the other hand, floatlng rates have also reduced the external-discipline on the larger industrialized economies - particularly the flEjor reserve-cur rency country - making it possible for these countries in effect, toexport lheir problems to the rest. of the wor1d. l0I. lilany countries tberefore consider i! important to initiate a serious discussion leading to lhe establishrnent. of an exchange rate systern designed to overcome boeh the recognized rigidities of a fixed par-value system and thedeslabilizing influences of floating rates. Both fixed and floating rate rdgimes need rules relative to domestic macro-economic policies. At present, manycountrles, developing and developed alike, recommend the adoption of target zones supported by official inlervention for tbe major trading currencies, combined rriEh and reinforced by co-ordination of oacro-economic policies and firm Rurtilateral surve i Ilance . 102. With respect to adjustment, nany counlries stress the need for an effective and equitable adjustment process through r.rhich countries can adjust their ba lance-of-paymen ts positions to sustainable levels, consistent nith tbe pursuit ofother macro-economic objectives such as growth and stability. This process should be symnetrical in its treatment of all countries - deficit as well as surplus and r eserve-cur r ency countrles - so that the burdens of adjustment are shared by all.
**Analysis**
The text discusses the issues with the current exchange rate system, highlighting the problems of floating rates and the need for a new system that balances the benefits of fixed and floating rates. It emphasizes the importance of coordination among countries and the need for an effective and equitable adjustment process. The text also mentions the difficulties faced by developing countries and the need for a system that takes into account their specific challenges. Based on this analysis, it seems that the text is primarily focused on international economic issues.

**Category**
International trade