Final Push for World Government

IMF Director Calls for a New Global Currency Issued by a Global Central Bank

Concluding Remarks at High-Level Conference in Zurich on the International Monetary System by Dominique Strauss-Kahn, Managing Director of the International Monetary Fund (IMF)

May 11, 2010

IMF.org - ... The events of recent days have reinforced the need for a robust global monetary and financial system, and though such immediate concerns are at the forefront of our attention, it is good that we are able to set aside time to discuss these broader issues...

Crisis is an opportunity. Many of you have spoken of the need to strengthen the system and increase its resilience to recurrent crises—and current events only add intensity to this sentiment. This crisis, and the still on-going aftershocks, is an opportunity to put in place reforms that will durably achieve this ...

Many expect a gradual move to a more multi-polar reserve system over time. On the near term, there are no clear contenders to match the depth and liquidity of the U.S. dollar markets. More widespread use of alternative reserve assets, e.g. euro or yen or renminbi denominated, could be encouraged, as could enhancing EM assets—e.g., through pooling arrangements, or a repo window.

A more multi-polar system may not enjoy the network effects of broad use of a single (sound) money, but the presence of alternatives provides a safety valve from unsound policies of any single reserve issuer. Greater exchange rate volatility could result, however, with potentially deleterious effects on resource allocation.

To encourage an orderly transition to a more diversified system, reserve holders may need to adjust portfolios only gradually, with mechanisms for collaboration (e.g. reporting on currency composition) to bolster the stability of the adjustment process ...

In principle, a new global currency issued by a global central bank, with robust governance and institutional features, could provide a nominal anchor and risk-free asset for the system independent of national currencies. This global central bank could also serve as a lender of last resort. But any such step requires considerably more debate on its merits, including on the need for a safety valve for the system given errors that might inevitably occur, as well as of its feasibility, given the very substantial multilateral effort required. I fear we are still very far from that level of global collaboration ...