THE GHOST OF BANCOR: THE ECONOMIC CRISIS AND GLOBAL MONETARY DISORDER
Louvain–la–Neuve, 25 February 2010
"...addressing the monetary aspect of the present economic crisis...."
"...The deep causes of this crisis include the dollar policy and, in a broader sense, the monetary regime that has been in force in the world for almost 40 years. Like the Bretton Woods system, it is incapable of imparting an acceptable macro-economic discipline to the world's economy because, being devoid of collectively accepted anchors, it encourages the persistence of unsustainable dynamics which spawn increasingly serious crises. Triffin's criticism of an international monetary system based on an exclusively national monetary policy is still valid, although today it demands a broader formulation, capable of taking into account the exchange rate anarchy and a multiplicity of influential monetary policies. The issue of international monetary order is not being afforded due attention and it needs to be addressed. Paths of reform for the future are difficult to identify and even more difficult to pursue. That is precisely why it is urgent for the academic and scientific communities, and indeed for all of those who harbor concern for the future of the global economy, to explore them..."
"Monetary nationalism. An analysis of monetary factors prior to the crisis, however, cannot be confined to what I have just mentioned. The notion of unsustainability applied to the monetary regime demands a broader interpretation calling into play the history of monetary orders.
In the last century this history was marked by a fundamental shift in relations between money and the two entities to which it had been anchored from time immemorial: a commodity (mainly gold) and the 'sovereign' or, to put it another way, intrinsic value and political power. Over the decades, the commodity anchor was relaxed while the political anchor was correspondingly strengthened.
Under the influence of deep-seated forces ranging from technology to the rise of the nation state and to the growing political influence wielded by the masses, the creation of money was freed from the blind influence of gold discoveries and entrusted to human discretion. This permitted greater progress toward more rational policies, but also a surrender to the temptations of nationalism and demagoguery. New risks arose, in the form of instability at the domestic and the international levels..."