PBOC official Yao Yudong calls for a new Bretton Woods agreement in the latest issue of China Securities Journal. He calls for expanded use of SDRs, says the gold standard failed already and Bitcoins
can act as an show the desire for an anchor for a new monetary system because they are mathematically limited. Bitcoins is in quotes so he may be referencing crypto-currency generally, or specifically Bitcoin. He doesn't call for adding Bitcoin into the SDR basket.
Here is the Bitcoin passage:
In multivariate sovereign monetary system, it is necessary for the international currency issuing country's currency to be properly bound to create an enabling management of global liquidity "anchor." However, faced with the dilemma, on the one hand, return to the "gold standard" is not feasible, the collapse of the Bretton Woods system has proved this point; the other hand, human society so far, in addition to gold and other precious metals can not find sufficient available outside the letter "anchor." In the international financial crisis, "Bitcoin" In the generation algorithm, it has been restricted in mathematics bitcoin within the next 100 years the largest stock of money is 21 million, thus forming the "anchor" recently popular. "Bitcoin" can prove to the international monetary States "anchor" desire. The current international monetary system problems inherent in addition to the "Triffin Dilemma", but its core defect is not credible "anchor." Keynes' global central bank plan "and Lin (2012) proposed the" paper gold "is still relatively far away.
Below is the Google translation. Chinese source here:
构建“新布雷顿森林体系” 管理全球流动性“总闸门”
BEGIN
2013, international currency issuing countries have adopted competitive quantitative easing (Competitive Quantitative Easing, referred CQE), leading to global excess liquidity, highlighting the current international monetary system, the inherent defects. In this paper, a new Bretton Woods system of initial proposals, ie G20 "strong framework for sustainable and balanced growth", to further implement the G20 Cannes Summit commitments and "IMF Articles of Association," the First Amendment to the basis of SDR growth target for the "anchor" implement the reserve currency of the international negotiations, to expand the IMF's global liquidity management supervision, to establish a more stable and a more dynamic international monetary system, which to some extent, the end of the current global liquidity "total gate" There is no constraints of the situation, to strengthen global liquidity management, as the ultimate super-sovereign currency to create the conditions for the transition.
Global liquidity institutional arrangements and regulatory development process
Global liquidity is the foundation of global economic activity. From economic globalization and international currency onset hundreds of years, mankind has not found an ideal global liquidity institutional arrangements. American economist John Kenneth Galbraith once profoundly pointed out that "money is so strange stuff it and love, is the largest source of human happiness, but it is also, and death, is the largest source of human Worry." The history of the silver standard, gold standard, gold exchange standard, the Bretton Woods system and the current floating exchange rate system (also known as Jamaica system), are the solutions to global liquidity problems of different institutional arrangements. 1930s Great Depression, countries "beggar thy neighbor" exchange rate policy, prompting countries to recognize the necessity and importance of international cooperation and hope to establish the coordination and management of the new system of global liquidity. 1936 England, America and France signed the "Tripartite Agreement monetary stability," This agreement provides Any State of the three countries to adjust the exchange rate, are required to give prior notice to the other parties. From competitive devaluation (Competitive Devaluation) developed to the three countries in exchange rate policy "limited cooperation" is an improvement. To the 20th century, "World War II" near the end, and finally in July 1944, 44 countries gathered in the government's economic envoy Bretton Woods, New Hampshire, USA, established a long-awaited international monetary system.
Bretton Woods system of international currency issuing countries (ie USA) liquidity supply constraints or "anchor" There are two: one is directly linked to gold dollar, national currencies are pegged to the dollar; Second is the international currency issuing countries undertaking by $ 35 official price of an ounce of gold convertibility. Bretton Woods system design of the basic assumption is that the basic balance of global liquidity, individual countries experiencing temporary liquidity shortage, they can through the International Monetary Fund (IMF) to Temporary Assistance to solve.
But Bretton Woods system inherent flaws in the design of the global liquidity shortage (global liquidity shortage). Rapid growth in the global economy after the war, the resulting global economy the demand for liquidity far more than gold, will inevitably lead to the appreciation of the international financial markets, gold dollar. In 1960, Robert Triffin in its "Gold and the dollar crisis - freely convertible in the future," a book for the global shortage of liquidity provided theoretical support, which is the international economic circles as "Triffin Dilemma." "Triffin Dilemma" put forward in the year, that in October 1960, the first large-scale war broke out to sell dollars, buy gold dollar crisis, which triggered a global liquidity shortage on the great debate. Late 1960s, due to the profound shortage of liquidity concerns, widely discussed and the formation of an international consensus, in 1969 passed the "IMF Articles of Association," the First Amendment, the default global liquidity shortage exists, has made three today to see to far-reaching achievements, in fact, have laid a "new Bretton Woods" basis: First, the creation of SDR (Special Drawing Rights), to provide global liquidity as a supplementary means; second is the establishment of a "meet the long-term global needs "(meet the long-term global need) and to" avoid the worldwide economic stagnation and deflation or excess demand and inflation "These two important concepts (" IMF Articles "Article XVIII Section I); Third member of the international mobility of international monitoring obligations ("IMF Articles" Article VII).
In 1969 the "new Bretton Woods" has not yet had time to be born, the international financial markets led to 1971's "Nixon shock" to the dollar pegged to gold at a fixed price and unlimited exchange for the "anchor" of the collapse of Bretton Woods.
Chinese have a saying, "as also Xiao, also lost." After the collapse of the Bretton Woods system, the global liquidity shortage institutional deficiencies instant solution. But floating exchange rate system (also known as Jamaica system), the global excess liquidity (global liquidity glut) new problems emerged, becoming its internal operational mechanism and its fundamental flaws. In the absence of statistics on global liquidity indicators for economic analysis has brought great difficulties. But in the 1980s the high inflation and the 2007 global financial crisis, are likely and global excess liquidity has a direct relationship. 20 In the 1980s, global inflation by as much as 13%, followed by the 1990s only slow down to 6%. The international financial crisis, the international currency issuing countries have adopted CQE, generating global liquidity shocks and severe overcapacity, can be said to repeat the 1930s "beggar thy neighbor" historical mistakes, bringing serious long-term consequences.
G20 originally belonging to the Bretton Woods system of international dialogue within the framework of an informal mechanisms, the international financial crisis, especially after the 2009 summit in Pittsburgh to become the most important global economic and financial coordination mechanism. G20 leaders at the Cannes summit pledged to "build a more stable and a more dynamic international monetary system" for the international monetary system reform of the direction. In the long term, by a global central bank to manage global liquidity. In 1941, Keynes proposed the establishment of two options: First, "minimum management", that joint action by central banks to follow the rules; second is the "maximum management", ie a global central banks to undertake international eventual liquidation. In the long term, should achieve the highest Keynesian program, namely the establishment of a global central bank. In 2009, China's central bank governor Zhou Xiaochuan in the "on the reform of the international monetary system thinking" the article pointed out, the international monetary system ideal institutional arrangements should be super-sovereign currency, such as the SDR.
During the transitional period, the current international monetary system is in fact the coexistence of multiple sovereign currency. Many on the international monetary system reform proposal is based on the global liquidity shortage in the conventional wisdom, too much emphasis on exchange rate adjustment and the IMF liquidity in the local distribution of relief, did not fully take into account the global excess liquidity "new normal" From the perspective of international rules to mention rebuilding "anchor."
From the international financial crisis, the global liquidity again after a lapse of 50 years of international attention. February 2011, the International Monetary Fund (IMF), Michel Camdessus, former president (Michel Camdessus), former Federal Reserve Chairman Paul Volcker (Paul Volcker), who initiated the reform of the international monetary system celebrity group published the "palace motion" (Palais-Royal Initiative), proposed including global liquidity management reform initiatives, including. People's Bank of China Deputy Governor Hu Lian (2011) also proposed to strengthen the global liquidity management advice. Bank for International Settlements (BIS) Committee on the Global Financial System (CGFS) in 2011, "global liquidity report," also called for a stronger regulatory framework to reduce global liquidity cycle fluctuations.
SDR is the 1960s after difficult discussions before the formation of the results. If you start all over again, would fall into protracted international debate. In the SDR is not yet unified global currency front, can give full play to its base currency capabilities. According to 1976 "IMF Articles of the" second amendment, SDR should be "international monetary system main reserve assets", the establishment of the basis of SDR (Basic SDR), the basis of the SDR basket of international currencies (ie international currency assets of the central bank balance sheet total assets) at the SDR exchange rate and the proportion translated into "basic SDR", then through international negotiations to establish its reasonable growth rates. Preliminary estimates, based SDR in 2004 to 2007 period the annual growth rate of about 5%, and 20% since 2008. Visible, CQE led to the foundation SDR increased significantly.
This paper attempts to put forward a preliminary proposal to reaffirm "IMF Articles of Association," the First Amendment to the global liquidity concerns in the G20 "strong framework for sustainable and balanced growth" to further implement the G20 summit in Cannes commitment to growth target based SDR "anchor" to return to Keynes "minimum management" program, the implementation of an international reserve currency system of consultations to establish a "new Bretton Woods." Just by "institutional supply" in order to end the current global liquidity "total gate" There is no constraint of the situation, to strengthen global liquidity management and supervision, "to avoid the worldwide economic stagnation and deflation or excess demand and inflation" for the ultimately to create conditions for transition to a super-sovereign currency.
Global excess liquidity
The existing international monetary system is the inherent weaknesses
Reached at the G20 summit, "a framework for strong sustainable and balanced growth", anything is to meet the "IMF Articles of Association," the First Amendment on the "long-term global demand," thus "avoiding the worldwide economic stagnation and deflation or excess demand and inflation inflation "rational global liquidity it? This is a major problem can not be avoided.
In 2009, China's central bank governor Zhou Xiaochuan in the "on the reform of the international monetary system thinking" a text has been given a clear answer, "In theory, the international reserve currency should first be anchored to a stable benchmark and issued clear rules in order to ensure orderly supply; secondly, its supply should be promptly and flexibly to changes in demand for change in regulation; Third, this adjustment must be detached from any one country's economic situation and interests. "
In the "Triffin Dilemma" yet to be resolved when the new problem has emerged. McKinnon (McKinnon) 1982 proved in theory due to currency substitution effect, leading to global instability of money demand. Koichi (1976) proved in the case of multi-national game prone to excess supply of liquidity. International currency issuing countries as there is no "higher status" is actually "global central bank" illiquid provide uniform rules, leading to excess liquidity, especially from the international financial crisis, the serious overcapacity. This problem has four deep-level mechanisms and concepts reasons:
The first is the "soft budget constraint" (Yao Yudong and Tangxin language, 2012). International currency country's international balance of payments exist "soft budget constraint", the long-term current account deficit financing, first, through its capital account surplus to "borrow", first through its international balance of payments gap to "print money . " Since there are two financing channels, the current international monetary system on the international currency issuing countries are "soft constraints" on the non-international currency issuing countries are "hard constraint" that the international balance of payments constraint. In the "soft budget constraint", the international currency issuing countries of macroeconomic policy is very big. Yao Yudong and Tangxin language (2012) in the IMF's famous Polak model built based on a provision of international liquidity system model that currency issuing countries domestic economic situation and macroeconomic policy not only dominated the overseas (such as offshore centers) mobility supply is still largely determines the non-domestic currency liquidity, there is a strong "spillover effect" de facto "global central bank", but do not bear the "global central banks' responsibilities and obligations .
The second is the "collective moral hazard." International currency issuing countries "print money" marginal cost is almost zero, and there were both domestic and international monetary multiplier effect. "Printing money" liquidity generated by the domestic economy either absorbed, either through the International Monetary multiplier amplification after overseas economies (mainly offshore center) absorption. Marginal revenue on the domestic economy may be positive, the marginal benefit of overseas economies is greater than zero (a small amount of seigniorage), but can not internalize spillover. If there is no constraint Taylor rule, in order to stimulate the domestic economy, "inadvertently" caused by global liquidity supply shocks. Offshore centers will gradually absorb liquidity into non-international currency issuing country's foreign exchange reserves, through the "borrow" a way back into the international currency issuing countries and bond markets. Thus forming a strange phenomenon, that is some kind of international currency, the more non-international currency issuing countries more "deep" This monetary assets, the formation of path dependence. On the one hand the international monetary spillovers issued no domestic marginal costs; the other hand, multiple international currency country can bring other countries "sunk cost." In both cases, driven by the presence of the international monetary currency issuing countries "swamped" and "collective moral hazard."
The third is the international money supply of the "tragedy of the commons." Global liquidity can be compared to the "commons." Every international currency issuing countries have distribution rights, but in the absence of an international agreement or mechanism under the premise of no effort to prevent other countries issued many international currencies, resulting in the International Monetary excessive "use." Even severe global liquidity flooded and can not find those responsible for the obvious.
The fourth is to guide policy conventional wisdom is outdated. Unconsciously, the 1930s of the "Keynesian revolution" is still a profound impact on the conventional wisdom, the fiscal or monetary policy to stimulate as the only "last straw", excessive dependence on demand management. No matching supply-side structural reforms, demand management, including quantitative easing that the root "straw" effect may be short-lived. Former IMF chief economist, "fault line" of Lagulamai Rajan in 2012, "Foreign Policy" published "real lesson of the recession," a text that "today's economic problem is not just lack of demand, and the same is the supply side imbalance. " Demand management can be compared to the "Western" and supply management is more like a "Chinese." Since 2007, the harmonization of the G20, the global economy has avoided a financial meltdown, countries continue to use the "Western" the necessity and effectiveness has been debatable. Should be based on prior international mainstream conventional wisdom of demand management, more and more consciously turned to the supply-side reforms, the use of "Chinese-based, Western medicine with the" combination therapy (see Jia Kang et al., 2013).
As the international currency issuing countries lack the money supply rule, leading to global excess liquidity. This excess is often sudden outbreak of the financial crisis of liquidity shortages after masked. In fact, one of the major financial crisis is precisely the pre-crisis excess liquidity and the resulting irrational exuberance. Global liquidity shortage in the distribution, if a particular country, "current account crisis" or "capital account crises", IMF can play a partial role in mitigation, but the overall liquidity regulation can not do anything. Global excess liquidity may bring three serious consequences:
The first is the international currency exchange rate fluctuations increased. "Triffin Dilemma" refers to the current account deficit and exchange rate stability of contradictions. But through quantitative easing, current account deficit can not, we can provide international liquidity, leading to the international currency devaluation risk (Yao Yudong and Tangxin language, 2012); CQE due to lack of coordination mechanisms, operating force is inconsistent, but increased exchange rate volatility risk.
The second is a potential risk of global inflation. In the Bretton Woods period, the global average inflation at around 4%. After the disintegration of the Bretton Woods system in 1971, the world plunged into high inflation among the more than 20 years, until the 1990s, gradually decline. Growth in global trade and the international production chain more closely in the case, the exchange rate system lacks perfectly elastic, must be considered "global output gap" problem. An international currency of a country's domestic output gap may be large, but the "global output gap" is not great. In this case, if the global excess liquidity, will accumulate global inflation risks.
The third is the deviation of asset prices, the accumulation of financial risks. On the one hand global excess liquidity, bringing irrational exuberance; hand global asset especially high credit rating of asset shortages. These two factors combine to form a global asset prices are high, and even bubbles. The international financial crisis generated a profound lesson is determined in advance asset price bubble on the real estate bubble in particular human society is almost powerless. 2007 years ago, the global liquidity is ample, with the real estate market of irrational exuberance, eventually leading to the U.S. subprime mortgage crisis. IMF chief economist Olivier Blanchard published in 2010, entitled "Reflections on macroeconomic policies," the report that central banks can control inflation target from 2% to 4% to expand, thus increasing the space for future interest rate the central bank regulated by maintaining a certain level of interest rates to prevent the accumulation of financial risks.
These three countries severely affected by the consequences of the implementation of G20 "framework for strong sustainable and balanced growth." At present, the G20 discussed within the framework of this "global rebalancing" is important, but not enough, how to manage global liquidity to "avoid the worldwide economic stagnation and depression or excessive demand and inflation," it is more important The. Should be "global liquidity glut" put on the agenda of the G20 and the reform of the international monetary system as one of the main.
CQE cause serious excess global liquidity may bring three serious consequences: the first is CQE "Prisoner's Dilemma." If, for a particular issue of national sovereignty, the Ministry of International Monetary quantitative easing economic reasons, other international currency issuing countries in order to prevent exchange-rate appreciation, the best strategy is to follow the use of quantitative easing, which would occur between the international currency issuing countries "Prisoner Dilemma. " This CQE and 1930s "race to devaluation" have the same purpose.
The second is the deviation of asset prices, and even asset bubbles, the accumulation of financial risks. The international financial crisis, a major lesson is that asset prices can not be ignored. However, in the "global asset shortage" in the case, may produce quantitative easing "Tobin effect" (Currency and asset substitution effect) and not necessarily effective demand, to a considerable extent on the use of the asset price inflation to seek recovery economic growth. Since the camera is currently making quantitative easing, the lack of rules, resulting in dynamic inconsistency, deviation of asset prices, particularly in the absence of short selling of the real estate market. It can be said, CQE on asset prices "opportunism" and the painful lessons of the international financial crisis, a summary of the phase deviation. Over the past 10 years, global inflation at 4%, while the national policy rate CQE lead to 2% or less, leading to global negative interest rates, this may be the IMF's chief economist Olivier Blanchard in 2010 wrote "Reflections on macroeconomic policy." When a text did not expect. There is no doubt that if the level of interest rates too low for too long sustained, could again lead to irrational exuberance, is laying the seeds of the next financial crisis.
The third is the CQE exit "cooperative dilemma." If an international currency issuing countries first exit quantitative easing, while other international currency issuing countries do not exit, the first exit sovereign currency relative to other international currencies, exports hit. Thus, in the absence of international coordination mechanism in the case, there is no international currency issuing countries willing to commit first exit, leading to global liquidity flood too long. In particular it should be noted that, so far, no individual country successful exit quantitative easing precedent, and no multi-national collective exit CQE precedent.
The "new Bretton Woods" initial ideas
1960s on the important role of global liquidity has caused widespread concern, and eventually led to the 1969 "IMF Articles of Association," the adoption of the First Amendment. Although the collapse of the Bretton Woods system in 1971, the "new Bretton Woods" is actually Keynes "minimum management" program, already in 1969 gave "birth permits." In the "new Bretton Woods", there is the need to fully implement the "IMF Articles of Association," the First Amendment, through international cooperation and supervision to strengthen global liquidity management, moderate grasp the global supply of liquidity "total gate", thus "avoiding worldwide economic stagnation and deflation or excess demand and inflation. "
Last a very long time, many countries are facing many local global liquidity shortage, imagine the whole situation of excess liquidity. From CQE was "invented" since serious excess global liquidity is no longer a small probability event, and may evolve into a "new normal." Therefore, the "new Bretton Woods" Its main task is to respond effectively to excess liquidity, difficulty is how to solve the serious problem of excess. Preliminary recommendations from the following five aspects of the mechanism construction to proceed:
(A) establishment of a global liquidity statistical and analytical framework
Economic and financial analysis of the past are often built on the framework of a single country or two countries, based on the rarely benefits from the global economy and global perspective to the analysis. Since a variety of complex reasons, global liquidity has not yet an internationally recognized statistical indicators. Bank for International Settlements (BIS) Committee on the Global Financial System (CGFS) in 2011, "global liquidity Report" has called for the development of a global liquidity cycle analysis framework. In the G20 "strong framework for sustainable and balanced growth", the Bank for International Settlements should be entrusted (BIS) and the IMF to provide technical support.
First, to establish global liquidity base currency is based SDR statistics. Currently, IMF will be divided into "core" liquidity (mainly refers to the creation of the banking system liquidity) and "non-core" liquidity (mainly refers to the creation of the shadow banking liquidity). But the IMF has not yet take into account the level of the base currency. Then create a national central bank's balance sheet statistical systems. Establish a "dual base currency statistical system" (Yao Yudong and Tangxin language, 2012), the distinction between domestic and overseas liquidation liquidation, were established two clearing system. International currency country's central bank liabilities side of the balance sheet should distinguish base money supply of the domestic economy and the supply of base money overseas. Statistics on foreign liquidity to estimate the international monetary multiplier.
(Two) based SDR growth target to "anchor"
In multivariate sovereign monetary system, it is necessary for the international currency issuing country's currency to be properly bound to create an enabling management of global liquidity "anchor." However, faced with the dilemma, on the one hand, return to the "gold standard" is not feasible, the collapse of the Bretton Woods system has proved this point; the other hand, human society so far, in addition to gold and other precious metals can not find sufficient available outside the letter "anchor." In the international financial crisis, "Bitcoin" In the generation algorithm, it has been restricted in mathematics bitcoin within the next 100 years the largest stock of money is 21 million, thus forming the "anchor" recently popular. "Bitcoin" can prove to the international monetary States "anchor" desire. The current international monetary system problems inherent in addition to the "Triffin Dilemma", but its core defect is not credible "anchor." Keynes' global central bank plan "and Lin (2012) proposed the" paper gold "is still relatively far away.
Currently the only compromise or second best option is through international rules to constrain the global supply of liquidity. Fortunately, the 1969 "IMF Articles of" The First Amendment has established an international legal basis for this. "IMF Articles" Article XVIII Section on "SDR allocation and revocation of the guiding principles and considerations" that "made on the allocation of funds in the SDR and revoke all decisions should be to meet the world's long-term needs (meet the long-term global need), when such a need occurs, seek to compensate for the long-term nature of the existing world monetary reserves, thus contributing to the establishment of a fund to achieve the objective, and to avoid the worldwide economic stagnation and deflation or excess demand and inflation . "
"IMF Articles of the" second amendment clearly, SDR should be "international monetary system, the main reserve asset." G20 through the "framework for strong sustainable and balanced growth" is also a very good precedent for international rules. In this macroeconomic framework, and the "IMF Articles of Association" First Amendment "long-term global need" by combining the implementation of "IMF Articles of the" second amendment, to establish "basic SDR" as a global currency monetary base growth targets. Roughly speaking, in considering the money multiplier effect, the growth rate should be broadly based SDR with the global economic output gap positively correlated negatively correlated with global inflation, taking into account the global asset price adjustments.
(Three) the implementation of national reserve asset management of international negotiations
National central bank balance sheet management should be included in international negotiations. The international legal basis for international negotiations have. "IMF Articles" Article VIII on "general obligations of Member States" in Section VII expressly provides that "in reserve assets obligation to cooperate on policy, each Member State shall, and funds or other Member States to cooperate to ensure that Member States Reserve assets in policy should promote international mobility and better international supervision, as well as the international monetary system to make the SDR the principal reserve asset consistent with the objectives. " In accordance with the "IMF Articles" Article VII expressly provides that States have the obligation to cooperate reserve assets policy. At an operational level, there are two ways:
First, the asset side constraints. On the international currency of the central bank's asset size and growth rate for consultations. This is the 1974 McKinnon (McKinnon) was first put forward, McKinnon 1982 also made a further elaborated, can be called "McKinnon negotiation." Meanwhile, in the "McKinnon Negotiation", the establishment of the international currency issuing countries to initiate and adopt quantitative easing exit coordination mechanisms. Non-international currency issuing countries if you do not buy an international currency issuing countries bonds can invest "SDR substitution account" (substitution account), thereby reducing the debt of the international monetary assets of the issuing country pressure, and promote diversification of reserves. Its exchange rate risk of the issuer of the international monetary and non-international currency issuing countries through consultations shared.
The second is the liability side constraints. Constraints overseas base money, control the international monetary multiplier. In the establishment of a "dual base currency statistical system" and consider the prevailing exchange rate of the premise, according to the different international currency issuing countries multiplier to estimate the supply of base money overseas countries the "target." In the "IMF Articles of Association" under the provisions of Article VII, international currency issuing country can have an overseas base currency of international rules. International currency issuing countries in the IMF assistance could explore overseas base currency liquidity through the issuance of "SDR note" approach to be hedged. Of course, the regulation of the monetary base target is difficult, simply "monetarism" is not feasible, the goal should be a reasonable fluctuation range.
(Four) adopted statutes to modify and expand the IMF's oversight of global liquidity
Bretton Woods conference in 1944 on the set of "IMF Articles of Association," there is no "capital account liberalization" clause. At that time the U.S. negotiators White (Harry White) and British negotiators Keynes, despite many differences, but in control of cross-border flows of capital, but indistinguishable from that point. White and Keynes were that international trade liberalization and international financial liberalization, there is conflict. They endorsed the liberalization of international trade, but against the free flow of international capital, then, in the "IMF Articles of Association," the purpose of excluding part of the IMF's jurisdiction on capital flows.
However, the development of the international monetary system founders often exceed expectations IMF. The first is the rise of private transnational capital. The early establishment of the Bretton Woods system in 1944, as many Member States faced with post-war reconstruction, funding constraints, and therefore private capital flows are small, and its importance is also limited, mainly by international trade trade credit financing. 20 In the early 1950s, European countries in the economic recovery, based on the progressive realization of currency convertibility, capital flows began to expand the scope, and then, with the Eurodollar and other offshore capital markets, the emergence of the 1970s capital flows significant increase in the scope and importance. Until the 1990s, cross-border capital flows have become a major source of investment in the world. However, cross-border capital of a sudden stop or reversal of capital account balance often resulting in serious gap. In this way, "current account crisis" gradually "capital account crises" replaced. Next is the "official transnational capital" that the international sovereignty substantial increase in the money supply. 2007 international financial crisis, an unexpected but can not accept the fact that, not only private transnational capital fluctuations are "capital account crises," an important aspect of the "official transnational capital" shocks, including the international monetary policy and the issuing country CQE Exit the risk of the disorder has become international "capital account crisis" one of the sources of new risks.
By the "IMF Articles of Association" constraint, IMF was not given on the capital account management and global liquidity supervision efforts. IMF Article IV consultations only through emergency loans and technical assistance within the framework of capital account issues discussed with the Member States. Unprecedented prosperity of private capital markets (including the shadow banking) problems caused by currency issuing countries on global liquidity and capital account irregular supply crisis occurs frequently, has exceeded 1944 "IMF Articles of Association" the scope of management, in 1969 "IMF Articles of Association," the First Amendment and the 1978 "IMF Articles of the" second amendment did not have enough reflected. If the IMF be inappropriate powers in this respect, we can not give full play to the role of the IMF. This is equivalent to the daily doctors can not diagnose the patient, but once patients developed serious illnesses, doctors have the right to surgery. No weekday diagnosis experience surgery is hasty.
"In 2011 the G20 summit in Cannes communique" that "We are also committed to further promote the IMF to become more systematic supervision, more equitable and more efficient, and better identify and resolve the spillover effect." In the new Bretton Woods system, through to the "IMF Articles of Association" revise and strengthen its oversight of global liquidity and capital account management role and to promote the management of reserve assets among countries international coordination and cooperation.
(Five) to expand the role of the SDR
Should be implemented "in 2011 the G20 summit in Cannes Communique" Declaration on strengthening the SDR representative, in 2015 or even earlier, when the re-evaluation, and compliance with existing standards to enter the SDR currency "basket", reflecting the various currencies in the world trading and financial system in the role. Special consideration should give full play to the role of the SDR. Should first establish "basic SDR" indicator will be based SDR as a global liquidity "base money" statistics and indicators to monitor. Meanwhile, SDR has a super-sovereign reserve currency of the characteristics and potential of the total amount should be gradually established SDR corresponds with the global liquidity mechanism. In various countries carried on the balance sheet, "McKinnon Negotiate" explore "substitution account plan" feasibility and its exchange rate risk sharing solutions to enhance the SDR functional reserve. Finally, it should expand the SDR in international trade and investment in the scope of use.
For the eventual establishment of a global central bank to create the conditions
The international monetary system reform is to achieve international currency issuing countries and non-international currency issuing countries of win-win cooperation, thus enhancing global welfare. As the global economy, especially the presence of non-currency issuing countries' global asset shortage "problem, create restrictions on mobility, need to rely on international currency issuing countries to provide domestic liquidity to meet its own economic growth. In this sense, it is the international currency issuing countries to solve the problem of shortage of global liquidity, both non-beneficiaries of international currency issuing countries also "free rider". Non-international currency issuing countries not because of excess global liquidity and the "recrimination" international currency issuing countries, but should focus on the reform of the international monetary system. In this reform, prompting international currency issuing countries can not simply consider its domestic objectives, making it bear the corresponding global responsibilities and obligations. Also see serious excess global liquidity is not in line with international currency issuing countries of their own interests, does not meet the "IMF Articles of Association," the spirit of the First Amendment. 2011, held in Nanjing G20 "International Monetary System Conference", China's central bank governor Zhou Xiaochuan pointed out that "although the reserve currency issuing countries may benefit from short-term special status of a reserve currency, but the benefits are limited, and long-term Look detrimental to their own economic balance and sustainable development. reform of the international monetary system lies interests of all parties to create a stable system, in order to facilitate its own reserve currency issuing countries to adjust and achieve win-win situation. "
Not subject to the discipline of money destined to stir up mischief, so the dean of monetary economics Milton Friedman warned: "Money is no laughing matter, so be handed over to the Central Bank." To borrow the words of his The core idea of this expression is the "International Monetary can not joke about, so be handed over to the international 'central bank'." When the international currency domestic policy and global welfare inconsistent when required at G20 "framework for strong sustainable and balanced growth" to strengthen policy coordination, while gradually in the international monetary system, the system level difference.
As private capital and official capital brings global liquidity shocks, IMF institutional capacity exists embarrassment. IMF did not expressly authorized, and must be involved in solving "capital account crisis" and supervisory practices in global liquidity in the past. Should be amended to "IMF Articles of Association", so the IMF global liquidity management and capital account management play a greater role, act as a "gatekeeper" role. Finally, as the base currency of the SDR innovative features to further expand the representation and use of SDR to super-sovereign currency system a smooth transition for the eventual establishment of a global central bank to create the conditions.
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