International Monies, Special Drawing Rights, and Supernational Money
The current international monetary system (IMS) is fragile because the dollar standard is rapidly deteriorating. The dual role the dollar as the dominant international money and national money cannot be easily reconciled because the US monetary authorities face a conflict between pursuing domestic objectives of employment and inflation and maintaining the international public good of a stable money. To strengthen the IMS, China has advocated the revitalization of the Special Drawing Rights (SDRs). But SDRs are neither money nor a claim on any international institution; are issued exogenously without any consideration to countries’ financing needs; and can activate international monies only though bilateral transactions. The historical record of SDRs as international reserves is altogether unimpressive. We propose instead the creation of a supernational bank money (SBM) within the institutional setting of a clearing union. This union would be a full-fledged agreement by participating central banks on specific rules of the game, such as size and duration of overdrafts, designation of countries that would have to bear the burden of external adjustment, and coordination of monetary policies objectives and at expense of the maintenance of the international public good. We also discuss structural changes that would make SDRs converge to SBMs.
|Date of creation:||Jul 2009|
|Date of revision:|
|Contact details of provider:|| Postal: 1309 East Tenth Street, Room 451, Bloomington, IN 47405-1701|
Web page: http://kelley.iu.edu/bepp/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Marc Flandreau & Jacques Le Cacheux & Frédéric Zumer, 1998.
"Stability without a pact? Lessons from the European gold standard, 1880-1914,"
CEPR;CES;MSH, vol. 13(26), pages 115-162, 04.
- Flandreau, Marc & Le Cacheux, Jacques & Zumer, Frédéric, 1998. "Stability Without a Pact? Lessons from the European Gold Standard 1880-1914," CEPR Discussion Papers 1872, C.E.P.R. Discussion Papers.
- Michael P. Dooley & David Folkerts-Landau & Peter M. Garber, 2005.
"An essay on the revived Bretton Woods system,"
Federal Reserve Bank of San Francisco, issue Feb.
- Gourinchas, Pierre-Olivier & Rey, Hélène, 2005.
"From World Banker to World Venture Capitalist: US External Adjustment and The Exorbitant Privilege,"
CEPR Discussion Papers
5220, C.E.P.R. Discussion Papers.
- Pierre-Olivier Gourinchas & Hélène Rey, 2007. "From World Banker to World Venture Capitalist: U.S. External Adjustment and the Exorbitant Privilege," NBER Chapters, in: G7 Current Account Imbalances: Sustainability and Adjustment, pages 11-66 National Bureau of Economic Research, Inc.
- Pierre-Olivier Gourinchas & Hélène Rey, 2005. "From World Banker to World Venture Capitalist: US External Adjustment and the Exorbitant Privilege," NBER Working Papers 11563, National Bureau of Economic Research, Inc.
- Gourinchas, Pierre-Olivier & Rey, Hélène, 2005. "From World Banker to World Venture Capitalist: US External Adjustment and the Exorbitant Privilege," CEPREMAP Working Papers (Docweb) 0606, CEPREMAP.
- Fratianni, Michele, 1974. "The Problem of Coexistence of SDRs and a Reserve Currency: Comment," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 6(1), pages 115-18, February.
- repec:fip:fedgsq:y:2007:i:sep11 is not listed on IDEAS
- Michele Fratianni & Andreas Hauskrecht & Aurelio Maccario, 1998. "Dominant Currencies and the Future of the Euro," Open Economies Review, Springer, vol. 9(1), pages 467-492, January.
- Pietro Alessandrini & Michele Fratianni, 2008.
"Resurrecting Keynes to Stabilize the International Monetary System,"
Mo.Fi.R. Working Papers
1, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
- Pietro Alessandrini & Michele Fratianni, 2009. "Resurrecting Keynes to Stabilize the International Monetary System," Open Economies Review, Springer, vol. 20(3), pages 339-358, July.
- Ben S. Bernanke, 2007. "Global imbalances: recent developments and prospects," Speech 317, Board of Governors of the Federal Reserve System (U.S.).
- Barry Eichengreen, 2005. "Sterling's Past, Dollar's Future: Historical Perspectives on Reserve Currency Competition," NBER Working Papers 11336, National Bureau of Economic Research, Inc.
- Elias Papaioannou & Richard Portes, 2008. "Costs and benefits of running an international currency," European Economy - Economic Papers 2008 - 2015 348, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Michele Fratianni, 2008.
"Financial Crises, Safety Nets, and Regulation,"
2008-08, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
- Campa, José Manuel & Goldberg, Linda S., 2004.
"Exchange Rate Pass-Through into Import Prices,"
CEPR Discussion Papers
4391, C.E.P.R. Discussion Papers.
- Lopez, Robert Sabatino, 1951. "The Dollar of the Middle Ages," The Journal of Economic History, Cambridge University Press, vol. 11(03), pages 209-234, June.
- Michele Fratianni & Andreas Hauskrecht, 1998. "From the Gold Standard to a Bipolar Monetary System," Open Economies Review, Springer, vol. 9(1), pages 609-636, January.
When requesting a correction, please mention this item's handle: RePEc:iuk:wpaper:2009-03. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rick Harbaugh)
If references are entirely missing, you can add them using this form.