In times of severe financial crises, such as we are living, returns to history to make comparisons and draw conclusions. The two most popular events of the last century the Great Depression of the thirties and the agreement for monetary Bretton Woods (BW) of 1944. In both cases, we rediscover the thoughts of Keynes, who gave a contribution of ideas to the policy of constructive New Deal and reform of the international monetary system launched in BW. On that occasion, Keynes was a loser with his consent. With pragmatism proposed in the House of Lords approved the agreement, using the metaphor of "mongrel", less beautiful, but more robust and helpful to a "dog breed". The "mongrel" who was born in BW ratified the international rise of the dollar and the decline of the pound. Prevailed over the dominant currency of the country, combining several leadership: technological, commercial, financial, political, military, and therefore also monetary. In exchange for the privilege of monetary sovereignty, the U.S. pledged to provide the "public good" to stabilize the dollar, backed by the guarantee of convertibility into gold.
In subsequent decades, has been the gradual deterioration of these requirements. The U.S. has built up large current account deficits. They have become the largest debtor in the world. The creditor countries took turns, until the situation current that sees China as the main creditor. The value of the dollar no longer convertible into gold, is supported by the convenience of many creditor countries not to revalue their currencies and the U.S. to reaffirm the stability of the dollar standard . The adjustments have been downloaded on the euro exchange rate, despite is the currency of the less unbalanced international trade. Although weak in fundamentals, the dollar is still indispensable. A collapse similar to that of the pound in 1930 would have serious consequences: higher interest rates, global recession, protectionist temptations. There is a coin alternative leader, not the euro, nor the yen and, a fortiori, the yuan.
The international monetary system is based on an unstable equilibrium. Prevails a stalemate, which do not operate the correctional market, because the necessary adjustment of exchange rates would be unsustainable. Neither work constructively with central banks, effectively implementing cooperation passive support of the weaknesses of the coin operated. The exceptional severity of the current financial crisis, which originated in the U.S. and propagatasi worldwide, highlighted the fragility of the global financial system without adequate rules. It remains unclear why the financial tsunami has engulfed the coins. This feeds the optimism of those who believe that the crisis, however serious, can be overcome without substantial changes in the international monetary order. A crisis has already begun, Bernanke reiterated the full confidence in U.S. financial leadership and reiterated the Chinese view of the excess savings as the primary cause of U.S. external deficits. The Fed chairman has thus understood the responsibility on the creditor countries the burden of adjustment: an objective which, it must be remembered, was the basis of the plan Keynes and BW to the U.S. to roles reversed from the creditor country, had rejected.
We share the view of those who think that the monetary system is exposed to dangerous crisis of confidence in the exchange rate, with serious consequences for global economic and political order. The passive defense of the status quo can remove the problems but not solving them. The current financial crisis should be interpreted as a strong warning bell. It adds to the growing seriousness with recurrent signs of fragility avvicendatisi since the sixties when the problem of introducing an alternative international currency to the dollar was already on the table. The answers that were given were ineffective, as the Special Drawing Rights, or impossible, such as the Substitution Account in the seventies. Prevailed buffer solutions in support of the dollar standard .
We believe the time has come to reconsider the "dog breed" of the plan Keynes, who had anticipated the time to BW compared to prevailing power relations. The introduction of a supranational currency, not substitute, but complementary to national currencies (U.S. dollars in the first place ), which guarantees the multilateral debt-credit relationships between countries at an international clearing house and the symmetrical distribution of the burden of adjustment, are the pivotal principles of the plan Keynes. These can offer an innovative benchmark in order to stabilize the international monetary system. The initiative can come from a bilateral cooperative agreement between the Fed and the ECB. The two main central banks succumb to the clearing house equivalent values \u200b\u200bof their bonds in exchange for short deposits in new supranational currency, which has the advantage of a currency basket. Currency risk is thus reduced by the effect of compensatory assets denominated in dollars and euro acquired by the clearing house. The new supranational currency offers a less risky for the central bank reserves. In particular, the Chinese central bank could take advantage and, ultimately, could be encouraged to enter into multilateral netting system. China, currently under-represented in international organizations, could take a weight corresponding to its growing economic power. This system can be set up at the IMF, which retrieves an active role in multilateral surveillance on credit and debit positions of member countries.
's time to replace the "mongrel" with a race in the new BW.
Pietro Alessandrini and Michele Fratianni
in Il Sole 24 Ore with the title "Coins, time dog Keynes, November 12, 2008.
0 comments:
Post a Comment