1/
I will provide a summary of the ”Bretton Woods 75 - Rethinking International Cooperation”
Oh boy, a lot of interesting information:
Quotes:
Christine Lagarde - IMF
Ricardo Reis - Professor London School of Economics
Emmanuel Farhi - Professor of Economics, Harvard
I will provide a summary of the ”Bretton Woods 75 - Rethinking International Cooperation”
Oh boy, a lot of interesting information:
Quotes:
Christine Lagarde - IMF
Ricardo Reis - Professor London School of Economics
Emmanuel Farhi - Professor of Economics, Harvard
2/
Main points:
- Need of a new global system with less reliance on US dollar.
- New Triffin dilemma, from having USD as world reserve currency.
- Need of a more central role of the IMF in the global financial system.
- Issue with Central banks’ bilateral swap lines.
Main points:
- Need of a new global system with less reliance on US dollar.
- New Triffin dilemma, from having USD as world reserve currency.
- Need of a more central role of the IMF in the global financial system.
- Issue with Central banks’ bilateral swap lines.
3/
”Today, the dominance of the dollar makes the US the world’s banker”
”We can imagine, a new, expanded role for the IMF, by adopting and modernizing some old ideas of what’s called the Keynes plan and the Triffin plan”
Emmanuel Farhi
”Today, the dominance of the dollar makes the US the world’s banker”
”We can imagine, a new, expanded role for the IMF, by adopting and modernizing some old ideas of what’s called the Keynes plan and the Triffin plan”
Emmanuel Farhi
4/
Then what is Keynes plan?
”An alternative set of proposals for international monetary institutions proposed by John Maynard Keynes (1883-1946) at the Bretton Woods negotiations on post-war monetary arrangements in 1944. The Keynes plan would (continue next slide)
Then what is Keynes plan?
”An alternative set of proposals for international monetary institutions proposed by John Maynard Keynes (1883-1946) at the Bretton Woods negotiations on post-war monetary arrangements in 1944. The Keynes plan would (continue next slide)
5/
have involved the creation of an international monetary unit, the ’bancor’. The plan was rejected and the international Monetary Fund was set up instead, on lines proposed by the United States.”
oxfordreference.com/view/10.1093/o…
What was the bancor?
have involved the creation of an international monetary unit, the ’bancor’. The plan was rejected and the international Monetary Fund was set up instead, on lines proposed by the United States.”
oxfordreference.com/view/10.1093/o…
What was the bancor?
6/
”The bancor was a supranational currency that John Maynard Keynes and E.F. Schumacher conceptualised in the years 1940-1942 and which the United Kingdom proposed to introduce after World War II. The name was inspired by the French banque or(’bank gold’). (Continue next slide)
”The bancor was a supranational currency that John Maynard Keynes and E.F. Schumacher conceptualised in the years 1940-1942 and which the United Kingdom proposed to introduce after World War II. The name was inspired by the French banque or(’bank gold’). (Continue next slide)
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This newly created supranational currency would then be used in international trade as a unit of account within a multilateral clearing system - the International Clearing Union - which would also have to be founded.”
en.m.wikipedia.org/wiki/Bancor
This newly created supranational currency would then be used in international trade as a unit of account within a multilateral clearing system - the International Clearing Union - which would also have to be founded.”
en.m.wikipedia.org/wiki/Bancor
8/
What was the Keynes Triffin plan?
”A radical solution is to create a new international organisation, an international central bank, to which would be handed over the foreign exchange reserves of all countries. This is the Keynes-Triffin Plan (Continue next slide)
What was the Keynes Triffin plan?
”A radical solution is to create a new international organisation, an international central bank, to which would be handed over the foreign exchange reserves of all countries. This is the Keynes-Triffin Plan (Continue next slide)
9/
on International Liquidity. The major obstacle to its implementation would be the reluctance of countries to give up their sovereignty over reserves. But it can be considered as a proposal to set the ball rolling for future negotiations.”
epw.in/system/files/p…
on International Liquidity. The major obstacle to its implementation would be the reluctance of countries to give up their sovereignty over reserves. But it can be considered as a proposal to set the ball rolling for future negotiations.”
epw.in/system/files/p…
10/
Emmanuel continues the conference by saying:
”You could imagine the IMF could centralise reserve sharing agreements by administering a global reserve facility at the IMF, perhaps by building on the existing drawing rights. The IMF could also try to (continue next slide)
Emmanuel continues the conference by saying:
”You could imagine the IMF could centralise reserve sharing agreements by administering a global reserve facility at the IMF, perhaps by building on the existing drawing rights. The IMF could also try to (continue next slide)
11/
multilateralise the decentralised parts and largely discretionary network of bilateral swap lines, either by acting as a central counterparty clearing house for these bilateral swap lines and absorbing some of the counterparty risk OR by offering itself its own (continue)
multilateralise the decentralised parts and largely discretionary network of bilateral swap lines, either by acting as a central counterparty clearing house for these bilateral swap lines and absorbing some of the counterparty risk OR by offering itself its own (continue)
12/
short term swap facility”
Next speaker was Ricardo Reis who talked about swap lines between Central Banks and the issue of them being bilateral. He proposed the swap lines going through IMF as the Central counterparty instead. Interesting.
short term swap facility”
Next speaker was Ricardo Reis who talked about swap lines between Central Banks and the issue of them being bilateral. He proposed the swap lines going through IMF as the Central counterparty instead. Interesting.
13/
”The IMF could be, show up as an intermediary between the Federal Reserve, since we’re talking about dollars and the other central banks and why I say it’s an intermediary is because many countries, say, India or Brazil would enjoy benefitting from (Continue next slide)
”The IMF could be, show up as an intermediary between the Federal Reserve, since we’re talking about dollars and the other central banks and why I say it’s an intermediary is because many countries, say, India or Brazil would enjoy benefitting from (Continue next slide)
14/
the swap lines but do not because the Federal Reserve worries about sovereign risk, well the IMF could appear in the middle, take the sovereign risk back because swap line with its SDR, say, with the dollar and the give a swap line (Continue next slide)
the swap lines but do not because the Federal Reserve worries about sovereign risk, well the IMF could appear in the middle, take the sovereign risk back because swap line with its SDR, say, with the dollar and the give a swap line (Continue next slide)
15/
to the Indian Rupee or Brazilian Real, therefore the IMF bearing the sovereign risk”
He also states:
”A difficulty with the swap lines as they are emerging is that they are bilateral and they are discretionary, not only do they exist as a spaghetti bowl (continue)
to the Indian Rupee or Brazilian Real, therefore the IMF bearing the sovereign risk”
He also states:
”A difficulty with the swap lines as they are emerging is that they are bilateral and they are discretionary, not only do they exist as a spaghetti bowl (continue)
16/
that could break easily, especially during a crisis.”
Christine Lagarde then says:
”We will be the lasagna of the spaghetti bowl”
that could break easily, especially during a crisis.”
Christine Lagarde then says:
”We will be the lasagna of the spaghetti bowl”
17/
Christine Lagarde in the end part:
”So... what you are telling me is that we should go back to the drawing board because we did actually explore for a period of time, combination of a liquidity line financial product that we could put together and that adresses (continue)
Christine Lagarde in the end part:
”So... what you are telling me is that we should go back to the drawing board because we did actually explore for a period of time, combination of a liquidity line financial product that we could put together and that adresses (continue)
18/
the issues of the emerging market economies that are in a way left out of the game and we will also.. considering much to central banks... displeasure, put it that way... how we could do exactly that, which is to sort of act as the (continue next slide)
the issues of the emerging market economies that are in a way left out of the game and we will also.. considering much to central banks... displeasure, put it that way... how we could do exactly that, which is to sort of act as the (continue next slide)
19/
platform that would in a way... take up all of the portion of the sovereign risk, so to speak”
platform that would in a way... take up all of the portion of the sovereign risk, so to speak”
20/
What I essentially see here is that the IMF is saying that they wish to be a global clearinghouse for the central banks?
What would be the best settlement mechanism?
What would you say Brad?
What I essentially see here is that the IMF is saying that they wish to be a global clearinghouse for the central banks?
What would be the best settlement mechanism?
What would you say Brad?
21/
Coincidence?
Could this be a way to settle between Central Bank currencies and SDR through XRP?
Top is bilateral. A lot of focus was on bilateral trust line swaps between CBs today and the inefficiency of that system.
Coincidence?
Could this be a way to settle between Central Bank currencies and SDR through XRP?
Top is bilateral. A lot of focus was on bilateral trust line swaps between CBs today and the inefficiency of that system.
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