What international monetary system for a fast-changing world economy

by Agnès Bénassy-Quéré, Jean Pisani-Ferry on 2nd April 2011

Though the renminbi is not yet convertible, the international monetary regime has already started to move towards a 'multipolar' system, with the dollar, the euro and the renminbi as its key likely pillars. This shift corresponds to the long-term evolution of the balance of economic weight in the world economy. Such an evolution may mitigate some of the flaws of the present (non-) system, such as the rigidity of key exchange rates, the asymmetry of balance of-payments adjustments or what remains of the Triffin dilemma. However it may exacerbate other problems, such as short-run exchange rate volatility or the scope for ‘currency wars’, while leaving key questions unresolved, such as the response to capital flows global liquidity provision. Hence, in itself, a multipolar regime can be both the best and the worst of all regimes.
Which of these alternatives will materialise depends on the degree of cooperation within a multilateral framework.

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  • tnciglkng 2nd July 2011

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  • Laneta 2nd July 2011

    Geez, that's ubnleievable. Kudos and such.

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  • Sukumar Nandi 23rd April 2011

    I read the paper. It's interesting with lot of up-to-date information.
    The analysis on renminbi seems to me a bit inadquate considering the fact of arbrtariness of the political regime and since economic policies are simply the derivative of the political regime, the credibility of the currency suffers

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  • Frans Verhagen 4th April 2011

    Why not considering making all currencies convertible or moving towards world currency by probing the feasibility of having a monetary standard upon either long-term monetary policy can be based? By having a standard most of the present monetary problems would be solved or at least reduced, including the volatility of exchange rates and the lack of credit and liquidity. www.timun.net proposes a carbon-based international monetary system that would form the basis of a global governance system that would integrate the social, economic and environmental pillars of sustainable development.

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