THE FRENCH have an important point. There's a direct connection between international trade and currency exchange rates. It's hard to talk about one without taking account of the other. But that isn't quite an argument for trying to reform the world's monetary system, as the French government is now proposing.
At the Bonn meeting, President Reagan is to press for a world trade conference next year to begin another round of dismantling the array of national laws that restrict commerce. It's a good idea. The increase in trade across national boundaries has been a constant contributor to economic growth since World War II, and this kind of conference is periodically necessary to keep the process going. In response, Francois Mitterrand, the president of France, has said that he wants a monetary conference "in the same process" to tie the European, Japanese and American currencies more closely together.
The United States supports both conferences, but it opposes any formal link between them. The reason is that substantial progress is altogether possible on the trade issues, but probably not on exchange rates. It's not because governments don't like fixed exchange rates. The world used them until the early 1970s, and commerce flourished. They were eventually destroyed by prosperity and by the rapid increases in the amounts of private money moving from country to country. By the 1970s, the flows of private capital were large enough to swamp governments' attempts at intervention. For the past dozen years, the rates have been set mainly by the daily buying and selling among banks and brokers in the currency markets. The Reagan administration is quite right when it says that not even the U.S. government has the resources to move those markets very far.
Although the American dollar is dangerously overvalued, that has little to do with the structure of the monetary system. Its causes go back to the huge American budget deficits.
But there is a way to make the exchange rates more stable, and such stability would benefit every trading country in the world. If governments can learn to coordinate their economic policies -- and that is the purpose of meetings like the one in Bonn -- then exchange rates will naturally settle into a more predictable and dependable pattern. That has been demonstrated by the great success of the European Monetary System, in which France and Germany are the major partners. Closer cooperation would require the Americans to get their budget deficits down and the Europeans to get their growth rates up. Stable exchange rates are the result of good policy, not a substitute for it.