The Undersecretary of Treasury for Monetary Affairs called yesterday on the major industrial nations to consider more central bank supervision and controls over the Euromarkers.
Anthony Solomon, addressing an international trade and investment conference sponsored by the National Journal, said, "The need for improved supervision has been recognized by a number of countries, and many have felt that a cooperative international approach would reinforce their own domestic efforts."
"A variety of instruments" should be considered to help contribute to the stability of the Euromarkets," Solomon said, "for example, the introduction of a minimum reserve requirement on Eurocurrency deposits."
Solomon said the Euromarket has been very useful in providing the necessary credit for world trade and expansion needs. "It has proven extraordinarily innovative in developing new financiel instruments to meet its customers' needs," he said.
Still, he added, "The growth of the market has given rise to a persistent debate: whether it is an engine of excessive credit creation which aggravates world inflation, or essentially a highly efficient intermediary reallocating funds from lenders to borrowers."
The issue of regulating world money markets has been a controversial one, particularly since the sharp drop of the dollar between 1976 and 1978.
Some financial experts have contended that the easy availability of credit from the unregulated Euromarket has "fostered excess liquidity, excess demand and inflation, " Solomon said.
He predicted also that there would be a gradual reduction in the international role of the dollar.
"The U.S. objective," he said, "is not to perpetuate a particular international role for the dollar."