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To the question of the reform of the global monetary system and the prospects of the US dollar
Material posted: Grinyaev SergeyPublication date: 13-09-2009

The deepening financial crisis has given new impetus to the idea of reforming the world monetary system and the formation of a uniform for all countries currency.

A lot of arguments about is the insolvency of the dollar as a world currency. The ability of Euro to withstand the pressure of the crisis also raises doubts. In these conditions, many experts believe that the new currency can rescue the global financial system and serve as the basis for its further development. As such offered the Chinese yuan, Japanese yen, the ruble, was a better way (perhaps a future North American monetary unit).

R. Mundell offered to match dollar, Euro and yen, in order to create a single world currency. However, it can be pure virtual, but in practice easily converted into one of its constituent currencies. However, this approach is in addition to the political integration of the countries issuing these currencies a single monetary policy, fixed exchange rate, unification of legislation, common economic interests and stuff that under the existing difference in the approaches of different States to monetary and macroeconomic policy and the existing contradictions between them makes this idea malarial used in practice. Moreover, it is unlikely the US will make any moves or to support measures that could undermine the position of the dollar. Overall Mandell evaluates the probability of occurrence in the next 5 years of a single world currency 30%. In his opinion, a global approach to a global currency does not work, you can implement the idea of creating regional currencies in Asia to create an Asian currency in Africa - African or to create a Eurasian currency (in the territories of several European and Asian countries).

With the idea to create a new legitimate global currency under UN auspices was made by the President of Kazakhstan N. Nazarbayev. In its creation, emission and regulation, in his opinion, should involve all countries. A new global currency should be based on the policy of the single currency calculations. Nazarbayev proposes to include the discussion of a single world currency on the agenda of the summit of "big twenty".

Ideas about the possible use of SDRs as a reserve currency. The IMF plans to provide to national economies, not only emergency loans, but also to do regular refinancing of governments and Central banks around the world indicate a possible move towards transformation into the global Central Bank is relatively independent emission center, is engaged in the production of world money. And the role of the latter is proposed that the existing currency IMF special drawing rights (SDRs). The idea of monetization of SDRs periodically occur in the financial world. In addition, the use of SDRs would allow U.S. authorities to rapidly devalue its currency, thereby significantly reducing the real value of U.S. debt.

E. Truman of the Peterson Institute for international Economics believes that the additional issue and the SDR allocation of USD 250 billion. 185 members of the IMF can greatly strengthen the credibility of these joint actions in the direction of overcoming the crisis. Moreover, he considers that, having received their share, any one country can be transferred (entirely or partially) a foreign country, like USA or Germany, instead of getting a loan in the currency. But since the interest rate on this loan now purely symbolic (about 0.6%), the option of obtaining the necessary economic means for the needs of most countries Truman sees as very attractive. Earlier a similar idea was pursued by J. and. Soros. The decision on this strategic issue are accepted in the IMF special majority of 85% of the vote. In addition, Truman offers a move to periodic quota increases as the world economy. He estimated that this measure would allow the poorest countries to receive SDR 17 billion, and other developing States would have received a total of 80 billion SDRs. Truman believed that although a large proportion of the SDR receives the developed countries, they can provide them to needy countries under the nominal interest rate. Soros had proposed that rich countries to poor countries transfer their share of SDRs to international assistance.

According to Reuters, Geithner so far not publicly endorsed the idea, while the British Prime Minister confirmed that she is regarded as one for discussion at the summit. In the joint communiqué of the BRIC countries on the eve of the summit also identified the need for SDR allocations in large amounts.

In fact, these proposals not only conserve the existing structure of the distribution of votes among IMF members, but in the long term means increasing the dependence of poorer countries from the rich. Especially if the first will not be able to repay the loans, which could lead to further predictably the redistribution of votes within the IMF again in favor of the famous countries. In addition, there are questions about the actual mechanism of using the SDR. In the end, to stimulate the economy, the virtual money will still have to change to real (most likely on the same dollars) for the purchase of goods or services, which again creates additional demand for the American currency.

Experts predict the yuan in the future the status of a new global reserve currency. Although official statements from China have been reported, the PRC, however, is taking steps in this direction. In December 2008, China proposed to use the yuan for trade between ASEAN countries and the Chinese Autonomous provinces of Guangxi and Yunnan. In addition, China is ready to offer loans to foreign importers purchasing Chinese products. In this case, the importers to use the yuan in transactions with Chinese companies. Chinese banks are encouraged to issue yanevych loans to foreign companies. The people's Bank of China has agreed with the Belarus currency swap 3 years for refusing to use in mutual trade of us dollars and euros. China provides 20 billion yuan (about 2.9 billion dollars.), and Belarus - about 8 trillion Belarusian rubles. Previously, China signed an agreement on currency swap to 180 billion yuan with South Korea. Thus, China is taking real steps to increase trade in yuan.

Apparently, the world is coming to the realization that the existing contradiction between global economy and local emission centers should be seriously discussed at the international level. So, Russia proposes to include in the agenda of the London summit the issue of global currency or a new "partially global currencies". However, the implementation of these ideas requires major agreements, including who will be its issue, to perform the role of a world Central Bank, to monitor a new monetary circulation. To unite all States under a single monetary policy under the leadership of the common Central Bank is still very far away. Attempts to link currency to standard units like gold or the US dollar also proved to be too restrictive for an independent monetary policy. Currently regionalization and the formation of a local monetary unions is a response to the dollar problem. The global economy is gradually becoming a world of multiple currencies.

Ideas of regionalism and the formation of monetary unions as a potential consequence of the crisis has also been widely adopted. Experts believe that in Asia the most active supporters of a single Asian currency are Japan and Thailand.

In particular, the ASEAN summit drew attention primarily to the fact that it is in the framework of the signing of the plan of the "ASEAN Community Economics" was not only voiced the idea of expanding and strengthening financial cooperation between the countries of the community to cope with external crisis shocks, but also took place reinforcement concrete measures. Even before the opening of the summit Finance Ministers in the format of "10 plus 3" (ASEAN, China, Japan and Korea) agreed on a coordinated programme of action to stabilise the financial and economic situation in Asia. In accordance with this program the size of the regional Fund of foreign exchange reserves will be increased from previous 80 to 120 billion dollars.

The formation of such a regional Fund to replace the former system of currency swaps aimed at providing assistance to any member of the mechanism of "10 plus 3" for the solution of current problems during the crisis, and first of all this measure is intended to protect the currencies of the participating countries from the crisis and facilitate the provision of assistance to developing States of Asia in case of emergency. Before the next summit in may this year the parties must reach unity on questions associated with the share of each country in the specified Fund, as well as the credit conditions of individual countries. It is assumed that 80% of the funds will be contributed by China, Japan and Korea. In addition, the planned establishment of an independent regional framework for the monitoring of the economic situation in order to strengthen the respective capacities of the region.

Given the fact that the total GDP of countries in the format of "10 plus 3" is about 9 trillion dollars, or 16% of the world economy, and the total volume of currency reserves - about 3.6 trillion dollars, or more than half the world's reserves, the development and adoption of agreed measures in financial and economic sphere will play an important role in stabilizing the regional financial market, and also provides a framework for coordinated action in times of economic turmoil.

In fact, these measures can be considered as real steps towards creating a full-fledged Asian monetary Union. Begins to form a strong financial centre led by China, Japan and South Korea. In this case we can speak about the implementation of the idea of an "Asian IMF". So, according to the former Minister of Finance of Japan Masahiro Kawai, Asia needs own monetary Fund to protect the economies from capital flight and speculative attacks on the currency. He considers the creation of a common currency pool to $ 120 billion dollars. as an important step towards the creation of an Asian version of the IMF. Returning to the discussion of the idea of the possible establishment of an Asian monetary Fund, at the time proposed by Japan during the Asian currency crisis of the 1990s, and currently more relevant. During that period, the proposal was greeted negatively by the USA, who feared the growing influence of Japan in the region. China in that period also did not support this idea.

However, on the eve of the summit of "big twenty" China openly expresses dissatisfaction with the fact that the IMF imposes an overly active developing States its methods of economic management, while the Fund itself too late drew the attention of the world community to the problems of developed countries, especially the United States. Experts believe that China's views on "Asian IMF" can change dramatically.

In January 2009, the IMF published the results of the study "yen Bloc or yuan bloc: an analysis of currency arrangements in East Asia," in which he assessed the prospects for the two currencies as a possible basis for the formation of an Asian monetary zone. The Fund's experts came to the conclusion that monetary integration with China more beneficial to the economies of the region than integration with Japan or the USA. Although Japan dominated Asia's economy, the Chinese Renminbi looks increasingly attractive as an anchor currency in the light of the growing share of China in regional trade.

With the development of the crisis, the trend of localization of inter-state monetary funds begins to take more concrete shape. In addition to the above-mentioned Asian countries in the format of "10 plus 3", the creation of an interstate anti-crisis Fund in the amount of 10 billion dollars. agreed the member countries of the EurAsEC. Periodically gets reanimated idea of creation of Dinard in the Persian Gulf. The introduction of the single currency was repeatedly discussed by the leaders of the countries of South America. Assumptions about the possible creation of a North American Union and the introduction of a single currency in the region also periodically appear in the media.

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