From the Gold Standard to a Bipolar Monetary System

1998

1988

s Abstract The structure of international monetary relations has gained increasing prominence over the past two decades. Both national exchange rate policy and the character of the international monetary system require explanation. At the national level, the choice of exchange rate regime and the desired level of the exchange rate involve distributionally relevant tradeoffs. Interest group and partisan pressures, the structure of political institutions, and the electoral incentives of politicians therefore influence exchange rate regime and level decisions. At the international level, the character of the international monetary system depends on strategic interaction among governments, driven by their national concerns and constrained by the international environment. A global or regional fixed-rate currency regime, in particular, requires at least coordination and often explicit cooperation among national governments.

Atlantic Economic Journal, 1975

2003

In nv ve es st ti ig ga ac ci ió ón n e en n F Fi in na an nz za as s

Economy & Business Journal, 2017

The aim of the paper is to assess the impact of changing configuration of the world’s economic powers on monetary relations, and in particular on ensuring monetary stability. The intensive globalization and high economic growth in China have contributed to the transformation of the economic power system that determines the position of national currencies. Despite these changes, the dollar remains the main international currency and the euro has not reached the position of the global currency effectively competing against the dollar. Moreover, the growing economic potential of China is not reflected in the developing countries’ currencies positions. The analysis makes it possible to conclude that the absence of hegemon power in the global economy weakens the international monetary system stability. If countries form a system of close monetary cooperation to ensure transnational payment liquidity and relative stability of exchange rates in the world, the system would be more efficient...

Global Monetary Governance, 2007

One of the most remarkable developments in the world economy at the dawn of the new millennium is the rapid acceleration of cross-border competition among currencies-what I have elsewhere called the deterritorialization of money (Cohen 1998). 1 Circulation of national currencies no longer coincides with the territorial frontiers of nation-states. A few popular monies, most notably the U.S. dollar and the euro (succeeding Germany's Deutschmark, the DM) have come to be widely used outside their country of origin, competing directly with local rivals for both transactions and investment purposes. The origins of this development, which economists call currency substitution, can be found in the broader process of globalization, which for the purposes of this volume, following Kahler and Lake (Chapter 1) may be understood to refer to economic integration at the global level. The result is a fundamental transformation in the way money is governed. Where once existed monopoly, each state claiming absolute control over the issue and circulation of money within its own territory, we now find something more like oligopoly-a finite number of autonomous suppliers, national governments, all vying ceaselessly to shape and manage demand for their respective currencies. Monetary governance, at its most basic, has become a political contest for market loyalty, posing difficult choices for policymakers. Among the alternative policy choices available to governments today, an option that is attracting increasing attention is replacement of national currencies with a regional money of some kind. Currency regionalization occurs when two or more states formally share a single money or equivalent. Broadly speaking, two main variants are possible. First, countries can agree to merge their separate currencies into a new joint money, as members of Europe's Economic and Monetary Union (EMU) have done with the euro. This is currency unification, a strategy of alliance. Alternatively, any single country can unilaterally or by agreement replace its own currency with an already existing money of another, an approach typically described as full or formal dollarization. 2 This variant, a more subordinate strategy of

1999

Monetary Integration and Dollarization

Eurasia Review, 2024

The currency globalization and currency geopolitics do not exclude each other at all, but rather complement each other. At the same time, in certain historical periods, as a rule, one of them prevails: either currency globalization or currency geopolitics. The new world monetary order is being formed as a combination of monetary globalization and monetary geopolitics, in which the latter plays a predominant role.

Numerous authors have argued that the global monetary system since the abandonment of the Bretton Woods regime in 1971 has been characterized by financial instability. This instability has been expressed in significant currency fluctuations, currency crises, the collapse of equity prices in certain countries, even economic recessions as during the Asian Crisis. This paper considers the economic fundamentals of major economic areas such as the US, Europe, Asia with particular emphasis on China and the Emerging nations to argue that rapid economic growth in a low inflation environment for the majority of these economic regions contributes to an improvement of the financial stability of the global monetary system. These economic fundamentals along with important improvements in the global financial architecture implemented by the IMF explain the absence of major global financial crises during the past four years.

This paper describes the opportunities and also the difficulties of EMU with regard to international monetary cooperation. Even though the institutional and intellectual assistance to the coordination of monetary policy in the EU will probably be strengthened with the EMU, among the shortcomings of the Maastricht Treaty concerns the relationship between the founder members and those countries who wish to remain outside monetary union. Even though remedies exist, this problem is currently the main threat to monetary cohesion in Europe and also wider economic and political integration. The institutional and intellectual support for monetary cooperation in the G7 is insufficient. The transition to the third stage of EMU will accentuate this particular deficiency European and international monetary cooperation Monetary issues are not one of the predominant areas of cooperation between the United States and Europe. If a ranking were established, interest rate and exchange rate policies would be secondary to the regulation of financial markets and trade. Nevertheless, cooperation between the United States and Europe and, more generally, between the central banks and the G7 governments has sometimes played a major role, for instance, when the dollar soared in the mid-80s and collapsed in 1994, and during exceptional crises such as in Mexico in 1995. European monetary unification could end such timid initiatives. The European Central Bank (ECB) will assume the tasks of the central banks of the EU Member States participating in monetary union. The EU Council of Ministers (in consultation with the ECB, European Commission and European Parliament) will make decisions about European involvement in any new global agreement on exchange rates. It is understood that European policymakers and others are concerned about how these institutions will manage the monetary affairs of the newly formed euro area, regardless of the consequences for the cooperation with the rest of the world. However, many Americans are unaware of this process and this is unfortunate because there is evidence that economic and monetary union (EMU) will actually make international monetary cooperation more necessary. Until the transition to the third stage of the Maastricht process, uncertainties about the timing and composition of monetary union could increase the volatility of exchange rates of European currencies against the dollar. Any tendency for the ECB to liquidate excess dollar reserves inherited from the national central banks could further disrupt the foreign exchange market. The stability of the currency market is a shared priority of both Europe and the United States and it could generate calls for more concerted action and other forms of international monetary cooperation. The scholarly consensus is to help policy makers agree on a set of adjustments to economic policy. Strictly speaking, policy coordination does not require that policy makers from different countries share the same point of view. Politicians must justify their actions to their constituents and the credibility of their argument could be questioned if they are contradicting each other. So it is preferable that there is

2011

of talks on the new multipolar world economy. These talks generated much interest and highlighted the need for closer collaboration and exchange of ideas. It is, thus, hoped that the publication of this volume can serve to enhance our understanding and cooperation in this area. As the debate goes on, Mansoor Dailami and co-author Paul Masson's Prospects for a Multipolar International Monetary System will be seen as a seminal contribution-not least because it is a pleasure to read, including for those faint of interest in abstruse technicalities who just want to know the main lines of argument.

This year marks the 70 th anniversary of the epoch-making Bretton Woods institution. The breakdown of its crafted quasi-gold standard took place in crucial events which include America's unilateral suspension of the dollar's gold convertibility and a transition from a state-led to a market-oriented economy. Against the backdrop of continued global monetary disorder, for the first time in history, a national fiat currency replaced gold which once was the world's major reserve asset. This effectively renders the dollar as the de facto reserve currency. However, the principal flaw inherent in the dollarcentred world manifests itself in an increasing incidence of credit-induced crises which imperils global economic stability. This essay will discuss why the dollar has gained dominance and how it has affected and shaped the global economy. Its challenges will also be examined. Lastly, the trajectory of reforming the international monetary architecture will be evaluated.

This study has been prepared within the UNU-WIDER project on 'Macro-Economic Management (M-EM)'.