CEPII, Recherche et Expertise sur l'economie mondiale
What International Monetary System for a Fast-Changing World Economy?

Agnès Bénassy-Quéré
Jean Pisani-Ferry

 Highlights :

 Abstract :
Though the renminbi is not yet convertible, the international monetary regime has already started to move towards a 'multipolar' system, with the dollar, the Chinese currency and the euro 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 flaws of the present (non-) system, such as the rigidity of key exchange rates, the asymmetry of balanceof- 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 ‘currency wars’, 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.

 Keywords : International monetary system | Capital controls

 JEL : F33, F32
CEPII Working Paper
N°2011-04, March 2011

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 Fields of expertise

Money & Finance