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September 13, 2009
New Global Reserve Currency
• The international monetary system needs reform, but so do the Asian and US economies.
According to thought leaders from the principal world economies, the current international monetary system, reliant on the US dollar, is deeply flawed, but a single viable alternative is not readily apparent.
This was the outcome from the debate at the Annual Meeting of the New Champions on September 12, 2009 at Dalian, People's Republic of China, where they discussed the global currency reserve system.
Photo: Participants captured during the Dalian WorkSpace 2009 at the World Economic Forum's Annual Meeting of the New Champions in Dalian, China 10-12 September 2009. © World Economic Forum.
Photo: Participants gather at the Education for the Next Wave of Growth session at The World Economic Forum Annual Meeting of the New Champions in Dalian, China 10-12 September 2009. © World Economic Forum.
Photo: Michael D. Antonovich, Los Angeles County Supervisor, speaks during the North America's Economic Outlook session at The World Economic Forum Annual Meeting of the New Champions in Dalian, China 10-12 September 2009. © World Economic Forum.
• In March, China's Central Bank Governor Zhou Xiaochuan sparked controversy when he proposed that the International Monetary Fund create a new reserve currency - a proposal with enormous implications across Asia, which holds nearly US$ 4 trillion in foreign currency.
"I strongly supported the proposal made by Governor Zhou," said Yu Yongding, Senior Fellow, Institute of World Economics and Politics, Chinese Academy of Social Sciences (CASS), People's Republic of China and member of the Forum's Global Agenda Council on International Monetary Systems.
However, panelists agreed that the creation of a new global currency to replace the dollar and other sovereign currencies was not politically viable.
The overwhelming problems facing the Asian and US economies are not based on currency doubts. "Don't kid yourself. This crisis is not about currency problems. This problem is about the failures of policies," said Stephen S. Roach, Chairman, Asia, Morgan Stanley, Hong Kong. "We've had central banks that have just gone along for the ride, driven by ideologies, driven by politics."
Photo: Aron Cramer, President and Chief Executive Officer, Business for Social Responsibility (BSR), speaks during the Global Redesign Series -- What Is the Basis of a New Social Compact? session at The World Economic Forum Annual Meeting of the New Champions in Dalian, China 10-12 September 2009. © World Economic Forum.
Photo: Participants captured during the Dalian WorkSpace 2009 at the World Economic Forum's Annual Meeting of the New Champions in Dalian, China 10-12 September 2009. © World Economic Forum.
Photo: Zhu Min, Group Executive Vice-President, Bank of China, laughs during The Global Economic Outlook session at The World Economic Forum Annual Meeting of the New Champions in Dalian, China 10-12 September 2009. © World Economic Forum.
For the global financial system to steady itself, the US must increase exports and Asian economies, China's in particular, must do much more to reorient their growth away from external demand towards domestic consumption. "The most important thing for China is to speed up structural reform," agreed Yu.
When polled informally, participants preferred the yuan over the dollar as an investment but few believed it would replace the dollar as the global reserve. Among the panelists, only Oki Matsumoto, Founder and Chief Executive Officer of Japan's Monex Group, was mildly bullish on the dollar.
The World Economic Forum is an independent international organization committed to improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas.
Source: World Economic Forum
|GlobalGiants.com|
Edited & Posted by the Editor | 3:55 AM | Link to this Post
