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What International Monetary System for a Fast-Changing World Economy?

In: Reform of the International Monetary System: The Palais Royal Initiative

  • Agnes Benassy-Quere
  • Jean Pisani-Ferry

Though the renminbi is not yet convertible, the international monetary regime has already started to move towards a 'multipolar' system, with the dollar, the euro and the renminbi as its key likely pillars. This shift corresponds to the long-term evolution of the balance of economic weight in the world economy. Such an evolution may mitigate some of the flaws of the present (non-) system, such as the rigidity of key exchange rates, the asymmetry of balance of-payments adjustments or what remains of the Triffin dilemma. However it may exacerbate other problems, such as short-run exchange rate volatility or the scope for â??currency warsâ??, while leaving key questions unresolved, such as the response to capital flows global liquidity provision. Hence, in itself, a multipolar regime can be both the best and the worst of all regimes.Which of these alternatives will materialise depends on the degree of cooperation within a multilateral framework.

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This chapter was published in:
  • Jack T. Boorman & André Icard (ed.), 2011. "Reform of the International Monetary System: The Palais Royal Initiative," Books, Emerging Markets Forum, edition 1, number imfreform, July.
  • This item is provided by Emerging Markets Forum in its series Book Chapters with number imfreform-21.
    Handle: RePEc:emf:chpter:imfreform-21
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    14. William R. White, 2006. "Is price stability enough?," BIS Working Papers 205, Bank for International Settlements.
    15. Reinhart, Carmen & Kaminsky, Graciela, 1999. "The twin crises: The causes of banking and balance of payments problems," MPRA Paper 14081, University Library of Munich, Germany.
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