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The International Monetary System: Living with Asymmetry

  • Obstfeld, Maurice

This paper analyzes current stresses in the two key areas that concerned the architects of the original Bretton Woods system: international liquidity and exchange rate management. Despite radical changes since World War II in the market context for liquidity and exchange rate concerns, they remain central to discussions of international macroeconomic policy coordination. To take two prominent examples of specific (and related) coordination problems, liquidity issues are paramount in strategies of national self-insurance through foreign reserve accumulation, while recent attempts by emerging market economies (EMEs) to limit real currency appreciation have relied heavily on nominal exchange rate management. A central message is that a diverse set of potential asymmetries among sovereign member states provides fertile ground for a variety of coordination failures. The paper goes on to discuss institutions and policies that might mitigate some of these inefficiencies.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 8703.

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Date of creation: Dec 2011
Date of revision:
Handle: RePEc:cpr:ceprdp:8703
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  1. Claudio Borio & Piti Disyatat, 2011. "Global imbalances and the financial crisis: Link or no link?," BIS Working Papers 346, Bank for International Settlements.
  2. Magud, Nicolas & Reinhart, Carmen & Rogoff, Kenneth, 2011. "Capital Controls: A Meta-analysis Approach," MPRA Paper 30274, University Library of Munich, Germany.
  3. Guillermo A. Calvo & Carmen M. Reinhart, 2000. "Fear of Floating," NBER Working Papers 7993, National Bureau of Economic Research, Inc.
  4. Aaron Brown, 2011. "Exorbitant Privilege: The Rise and Fall of the Dollar and the Future of the International Monetary System, by Barry Eichengreen," Quantitative Finance, Taylor & Francis Journals, vol. 11(6), pages 825-826.
  5. Stephen Hall & George S. Tavlas, 2011. "The Debate about the Revived Bretton-Woods Regime: A Survey and Extension of the Literature," Discussion Papers in Economics 11/21, Department of Economics, University of Leicester.
  6. Murray C. Kemp, 1962. "Foreign Investment And The National Advantage," The Economic Record, The Economic Society of Australia, vol. 38(81), pages 56-62, 03.
  7. C. Randall Henning, 1994. "Currencies and Politics in the United States, Germany, and Japan," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 15.
  8. Edwin M. Truman, 2008. "On What Terms Is the IMF Worth Funding?," Working Paper Series WP08-11, Peterson Institute for International Economics.
  9. James M Boughton, 2011. "Jacques J. Polak and the Evolution of the International Monetary System," IMF Economic Review, Palgrave Macmillan, vol. 59(2), pages 379-399, June.
  10. Matteo Maggiori, 2012. "Financial Intermediation, International Risk Sharing, and Reserve Currencies," 2012 Meeting Papers 146, Society for Economic Dynamics.
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