With the outbreak and spread of the financial crisis, we are once again faced with an old and unresolved problem, that is, what kind of international reserve currency can maintain global financial stability and promote world economic development. The silver standard, gold standard, gold exchange standard and Bretton Woods system in history are all different institutional arrangements to solve this problem, which is also one of the purposes of the establishment of the International Monetary Fund (IMF). However, the financial crisis shows that this problem is far from being solved, but it is getting worse because of the inherent defects of the current international monetary system.
Theoretically speaking, the value of international reserve currency should first have a stable benchmark and clear issuance rules to ensure orderly supply; Secondly, its total supply can be adjusted timely and flexibly according to the change of demand; Third, this adjustment must be divorced from the economic situation and interests of any country. At present, taking sovereign credit currency as the main international reserve currency is a rare special case in history. This crisis once again warns us that we must creatively reform and improve the current international monetary system, promote the improvement of the international reserve currency in the direction of stable value, orderly supply and adjustable aggregate, and fundamentally safeguard global economic and financial stability. The financial crisis broke out and spread rapidly around the world, reflecting the inherent defects and systemic risks of the current international monetary system.
For reserve currency issuing countries, domestic monetary policy objectives often conflict with the requirements of various countries for reserve currency. Monetary authorities can neither ignore the international function of their own currency and simply consider domestic goals, nor take into account different goals at home and abroad at the same time. It may not fully meet the growing demand of the global economy because of the need to curb domestic inflation, or it may lead to global liquidity flooding because of excessive stimulation of domestic demand. Theoretically, Triffin's dilemma still exists, that is, the issuing country of reserve currency cannot provide liquidity to the world and ensure the stability of its currency value at the same time.
When a country's currency becomes the world's primary product pricing currency, trade settlement currency and reserve currency, the country's exchange rate adjustment against economic imbalance is invalid, because most countries' currencies refer to this country's currency. Economic globalization not only benefits from a widely accepted reserve currency, but also suffers from the institutional defects of issuing this currency. Judging from the frequent and intensified financial crisis after the disintegration of the Bretton Woods system, the world may pay more for the current monetary system than it gains from it. Not only the users of reserve currency have to pay a heavy price, but also the issuing countries are paying an increasing price. The crisis is not necessarily the intention of the reserve currency issuing authorities, but the necessity of institutional defects. It is an ideal goal of international monetary system reform to create an international reserve currency that is decoupled from sovereign countries and can maintain its long-term stability, so as to avoid the inherent defects of sovereign credit currency as a reserve currency.
Although the propositions of "1" and "super-sovereign reserve currency" have a long history, they have not made substantial progress so far. In the forties of last century, Keynes put forward the idea of establishing an international monetary unit "Bancor" based on 30 representative commodities, but unfortunately it failed to come true. The subsequent collapse of the Bretton Woods system based on the White Plan showed that Keynes's plan might be more far-sighted. As early as the defects of the Bretton Woods system were exposed, the IMF created the Special Drawing Rights (SDR) at 1969 to alleviate the inherent risks of sovereign currency as a reserve currency. Unfortunately, due to the limitation of distribution mechanism and scope of use, the role of SDR has not been fully exerted so far. But the existence of SDR provides a glimmer of hope for the reform of the international monetary system.
2. Super-sovereign reserve currency not only overcomes the inherent risks of sovereign credit currency, but also provides the possibility for regulating global liquidity. An international reserve currency managed by a global institution will make it possible to create and regulate global liquidity. When a country's sovereign currency is no longer used as the scale and reference standard of global trade, its exchange rate policy will greatly enhance the adjustment of imbalance. These can greatly reduce the risk of future crises and enhance the ability to deal with crises. Reform should focus on the overall situation, start from small things, step by step, and strive for success.
Rebuilding a new reserve currency with a stable benchmark and acceptable to all countries may be a long-term goal. The establishment of an international monetary unit envisaged by Keynes is a bold vision of mankind, which requires extraordinary foresight and courage of politicians from all over the world. In the short term, the international community, especially the IMF, should at least acknowledge and face up to the risks brought by the current system, and constantly monitor, evaluate and promptly warn.
At the same time, special consideration should be given to giving full play to SDR. SDR has the characteristics and potential of super-sovereign reserve currency. At the same time, its expansion and issuance will help the IMF overcome the difficulties it faces in fund, voice and representative reform. Therefore, efforts should be made to promote the distribution of SDR. This requires the active political cooperation of all member States, especially the adoption of the fourth amendment to the Articles of Association of 1997 and the corresponding SDR allocation resolution as soon as possible, so that the member States that joined after 198 1 can also enjoy the benefits of SDR. On this basis, consider further expanding the issuance of SDR.
The scope of SDR needs to be broadened to truly meet the requirements of countries for reserve currency.
● Establish the clearing relationship between SDR and other currencies. Change the current situation that SDR can only be used for international settlement between governments or international organizations, and make it a recognized means of payment for international trade and financial transactions.
● Actively promote the use of SDR pricing in international trade, commodity pricing, investment and corporate bookkeeping. It not only helps to strengthen the role of SDR, but also effectively reduces asset price fluctuations and related risks caused by the use of sovereign reserve currency.
● Actively promote the creation of SDR-denominated assets and enhance their attractiveness. The IMF is studying securities denominated in SDR, and if it is implemented, it will be a good start.
● Further improve the fixed value and issuance method of SDR. The range of SDR-denominated basket currencies should be extended to major economic powers in the world, and GDP can also be considered as one of the weighting factors. In addition, in order to further enhance the market's confidence in its currency value, the issuance of SDR can also be changed from artificially calculating the currency value to being backed by actual assets, and consideration can be given to absorbing the existing reserve currencies of various countries as its issuance preparation. Centralized management of part of the reserves of member countries by the IMF is not only conducive to enhancing the international community's ability to cope with the crisis and maintaining the stability of the international monetary and financial system, but also a powerful means to strengthen the role of SDR.
1. A trustworthy international institution will pool part of the global reserve funds and provide a reasonable rate of return to attract countries' participation, which will play a more effective role in reserve funds than countries' scattered use and individual efforts, and have a stronger deterrent and stabilizing effect on speculation and market panic. For participating countries, it is also conducive to reducing the required reserves and saving funds for development and growth. The IMF has many members and is the only international institution in the world whose responsibility is to maintain monetary and financial stability. It can supervise the macroeconomic policies of member countries. It has corresponding professional expertise and natural advantages in managing the reserves of member States.
2. The 2.IMF's centralized management of member countries' reserves will also be a powerful means to promote SDR to play a greater role as a reserve currency. The IMF can consider setting up an open-end fund in a market-oriented way, centrally managing the reserves accumulated by member countries in the existing reserve currency, setting up fund units denominated in SDR, allowing investors to subscribe freely in the existing reserve currency and redeem the required reserve currency when necessary, which not only promotes the development of SDR-denominated assets, but also partially regulates the global liquidity of the existing reserve currency, and can even be used as a basis for increasing SDR issuance and gradually replacing the existing reserve currency.