Nexus - 1604 - New Times Magazine-pages

Page Content (OCR)

decisions implementing these principles should be | EMERGENCE OF REGIONAL CURRENCIES made to root out the irresponsible and often On | January 1999, the European Union established undisclosed lending at the heart of our problems. To _ the euro as its regional currency. The euro has grown do this, we need cross-border supervision of financial in prominence over the past several years. However, it institutions; shared global standards for accounting is not to be the only regional currency in the world. and regulation; a more responsible approach to There are moves and calls for other regional currencies executive remuneration that rewards hard work, effort to be set up throughout the world. and enterprise but not irresponsible risk-taking; and In 2007, Foreign Affairs, the journal of the Council on the renewal of our international institutions to make them Foreign Relations, ran an article titled "The End o effective early-warning systems for the world National Currency", in which it began by discussing economy.” (Emphasis added.) the volatility of international currency markets and In early October 2008, it was saying that very few "real" reported that "as the world's solutions have been proposed central bankers gather this to address successive currency week in Washington DC for an crises. The author posed the IMF-World Bank conference to The euro has grown question: "...will restoring los discuss the crisis, the big in prominence over the sovereignty to governments question they face is whether it put an end to financia is time to establish a global past several years. instability?" economic ‘policeman’ to However, it is not to be He answered by stating: ensure the crash of 2008 can . "This is a dangerous never be repeated”. Further, the only regional currency misdiagnosis... The righ "any organisation with the 1 course is not to return to a power to police the global in the world. mythical past of monetary economy would have to include sovereignty, with governments representatives of every major controlling local interest and country—a United Nations of exchange rates in blissfu economic regulation". A former governor of the Bank ignorance of the rest of the world. Governments mus of England suggested that "the answer might already let go of the fatal notion that nationhood requires be staring us in the face, in the form of the Bank for them to make and control the money used in their International Settlements (BIS)". However, he said: territory. National currencies and global markets "The problem is that it has no teeth. The IMF tends to — simply do not mix; together they make a deadly brew couch its warnings about economic problems in very _ of currency crises and geopolitical tension and create diplomatic language, but the BIS is more independent ready pretexts for damaging protectionism. In order and much better placed to deal with this if it is given to globalize safely, countries should abandon the power to do so." monetary nationalism and abolish unwanted currencies, the source of much of today's instability.” The author explained: "Monetary nationalism is simply incompatible with globalization. It has always bi t _ been, even if this has only become : apparent since the 1970s, when all the world's governments rendered their currencies intrinsically worthless." The author stated: "Since economic development outside the process of globalization is no longer possible, countries should abandon monetary nationalism. Governments should replace national currencies with the dollar or the euro or, in the case of Asia, collaborate to produce a new 4A . multinational currency over a é some rvilfe comparably large and economically diversified area."” past several years. However, it is not to be the only regional currency in the world. J somerville fa Le 12 ¢ NEXUS JUNE — JULY 2009 The euro has grown in prominence over the www.nexusmagazine.com