The Peoples Bank of China governor Zhou Xiaochuan submitted a proposal for a new monetary order, or rather a return to some of the old ideas of the past with a global currency administered by the IMF.
The return of the SDR has some merits and should be subject to some serious discussion on the eve of the G20 meetings in April. The main focus of the meeting should be elsewhere, but revisiting a discussion on a global currency may be appropriate at this time given the strong need for liquidity around the world. The US may be at odds with the rest of the world when its main objective is o help the domestic economy. While spurring the US economy is good for the rest of the world, the objectives and timing of the US may not be aligned with the rest of the world. This is the classic Triffin Dilemma associated with a reserve currency. The US may have less interest in a strong dollar or concern fro developed countries relative to US goals. A method for changing the golas would be through more international control of liquidity.
Yet any fiat money will have some of the same inherent problems that exist with a dollar-based global system. Nevertheless, the world and in particular Chin would not be captured by the objectives of the US and the Fed if there was a new monetary order.
The return of the SDR has some merits and should be subject to some serious discussion on the eve of the G20 meetings in April. The main focus of the meeting should be elsewhere, but revisiting a discussion on a global currency may be appropriate at this time given the strong need for liquidity around the world. The US may be at odds with the rest of the world when its main objective is o help the domestic economy. While spurring the US economy is good for the rest of the world, the objectives and timing of the US may not be aligned with the rest of the world. This is the classic Triffin Dilemma associated with a reserve currency. The US may have less interest in a strong dollar or concern fro developed countries relative to US goals. A method for changing the golas would be through more international control of liquidity.
Yet any fiat money will have some of the same inherent problems that exist with a dollar-based global system. Nevertheless, the world and in particular Chin would not be captured by the objectives of the US and the Fed if there was a new monetary order.
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