Reform of the international monetary system
by Antonio Mosconi
The wars in western Asia and the financial crisis of 2007-2008 marked the end of the American aspiration to world supremacy. Global common goods, such as security and monetary and financial stability, are no longer guaranteed by the United States.
The possibility of cooperation between large regional areas paves the way to the establishment of a new world order.
The dollar, the currency of the most indebted country in the world, can no longer function as a global currency. The multi-currency monetary system, which is being formed spontaneously, can allow the use of currencies for competitive purposes, as happened between the two world wars. A global anchor is therefore needed, independent of individual states. This function can initially be performed by the SDR basket (managed by the International Monetary Fund), as suggested by the Triffin Foundation. The entry of the Chinese renmimbi into the SDR basket, a legacy - imbued with bold intentions - of the Obama Administration, has already made possible a bond issue by the World Bank in China for two billion SDRs (3.8 billion USD). Other SDR issues are conceivable for the financing of some colossal transnational projects, such as the Silk Road and the European Plan for Africa. The development of a market of financial instruments denominated in SDR will facilitate the resumption of the development of the official use of SDRs as an international reserve asset, to which the main currencies are linked (dollar, euro, renmimbi, and to a lesser extent yen and sterling, and others in perspective).
This will be possible as soon as the current United States’ attitude of withdrawal from supranational institutions will be overcome, and a full American participation in cooperation with other regions of the world will be re-established. At that time, the SDR will be able to bring together the three functions of a world currency: a unit of account, a means of payment and a reserve instrument, thus finally implementing the Second Amendment of the Articles of the IMF which, inspired by Robert Triffin, contains the commitment to make the SDR "the main reserve asset of the international monetary system" (1976). The European initiative should be aimed at maintaining this perspective alive, and at "inducing" the United States to fruitfully cooperate.
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www.csfederalismo.it
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www.sdrf.org.cn
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https://piie.com