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An Agenda for the Reform of the International Monetary System

  • Otto Hieronymi
Part of the Studies in Banking and Financial Institutions book series (SBFI)

Abstract

It is clear that beyond the level of crisis management that largely prevailed in late 2008 and in the early months of 2009, there is also a need for more systematic and balanced long-term reforms. The growing awareness of the need for longer-term reforms was reflected in the debate that led up to the London Summit of the Group of 20 (G20), in the “Global Plan for Recovery and Reform” adopted by the 20 participants on April 2, 2009 and in the several more detailed texts also adopted by the G20. A first reading of these texts confirms the strong desire to create an atmosphere of positive change, of broad national actions and of international cooperation.1

Keywords

Monetary Policy Central Bank International Monetary Fund Current Account World Trade Organization 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Notes

  1. 2.
    Otto Hieronymi and Catherine Currat, “The Complexity and the Organizing Principles of International Order,” Foresight, Journal of Future Studies and Strategic Thinking and Policy, vol. 6, no. 4, pp. 198–203, Emerald Group Publishing Ltd, 2004.Google Scholar
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    Finally, governments, central banks, and regulatory agencies will have to meet the greatest of all challenges: setting up a well-structured and efficient cooperative framework at the global level. The process of globalization throws up problems of worldwide dimensions, which cannot be handled on an ad hoc basis. Even if all preventive measures by national authorities work, their sum total may turn out to be dismally inadequate for reducing the risk of systemic crisis. And there is a genuine risk that in the case of a major crisis, national policy reactions will tend to diverge rather than converge. Establishing a cooperative framework should therefore be the major assignment for all those who are given the task of designing a new financial architecture. Alexandre Lamfalussy, Financial Markets in Emerging Markets. An Essay on Financial Globalization and Fragility, Yale University Press, New Haven and London, 2000, p. 175.Google Scholar
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    The last chapter in Paul Volcker’s and Toyoo Gyothen’s joint book on international monetary issues bears the title “A New World Order or a New Nationalism”. It is clear that both Volcker and his Japanese friend and co-author were for a “new (stable and open) world order” where both the Unite States and Japan (and Europe) would have had to play a constructive role. But neither author felt it appropriate to go beyond the call for “cooperation,” “leadership” and “responsible policies”. Their ideas fell far short of outlining any suggestions for a new rule-based international monetary order and how to make it politically acceptable for the Japanese and for the Americans. Paul Volcker and Toyoo Gyothen, Changing Fortunes: The World’s Money and the Threat to American Leadership, Times Books, New York, 1992.Google Scholar
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    For this argument cf. Otto Hieronymi, “In Search of a New Economics for the 1980s: The Need for a Return to Fixed Exchange Rates,” Annals of International Studies, Institut Universitaire de Hautes Etudes Internationales, vol. 12, pp. 107–26, Geneva, 1982.Google Scholar
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    According to Daniel Tarullo: “(W)here a regulatory sphere includes significant transnational activity, the effectiveness and efficiency of national regulation may increasingly depend on bilateral, multilateral, or even supranational cooperation. Basel II reveals the potential hazards as well as benefits of one approach to such arrangements. But its ultimate lesson is that something different must be tried, not that sustained and cooperative efforts should be abandoned.” Daniel K. Tarullo, Banking on Basel. The Future of International Financial Regulation, Peterson Institute for International Economics, Washington, DC, August 2008, p. 284.Google Scholar
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    Cf. Otto Hieronymi, “The International Financial Institutions and the Challenge of Transition and Reconstruction in the Former Communist Countries of Central and Eastern Europe,” in Miklos Szabo-Pelsöczy (Editor), Fifty Years After Bretton Woods, (Sixth Conference of the Robert Triffin-Sziràk Foundation, Brussels 1994), Averbury, Aldershot, 1996, pp. 129–40.Google Scholar
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    Quoted in Shalendra D. Sharma, The Asian Financial Crisis. Crisis, Reform and Recovery, Manchester University Press, Manchester, 2003, p. 285. See also Sharma’s analysis of the evolving international financial architecture in the wake of the Asian crisis, op. cit. pp. 284–339.Google Scholar
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  24. 34.
    On the link between the efficiency of the market economy and the role of solidarity cf. Otto Hieronymi, “The ‘Social Market Economy’ and Globalisation: The Lessons from the European Model for Latin America,” in Emilio Fontela Montes and Joaquin Guzmàn Cueva (Editors), Brasil y la Economia Social de Mercado, Cuadernos del Grupo de Alcantara, 2005, pp. 247–300;Google Scholar
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© Otto Hieronymi 2009

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  • Otto Hieronymi

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