International Monetary Convention Project: Supporting Papers The documents on this page require Adobe Acrobat Reader for reading and printing Reforms to the International Monetary System John Williamson, Senior Fellow, Institute for International Economics, October 28, 2005 (PDF format; 7 pages; 28k). The Future of the IMF Nouriel Roubini, Stern School of Business, NYU and Roubini Global Economics1 and Brad Setser Global Economics Governance Center, University College, Oxford and Roubini Global Economics, October 2005 (Updated September 2006) (PDF format; 10 pages; 48k). Understanding Global Imbalances Richard N. Cooper, Harvard University (PDF format; 11 pages; 36k). The BRICs Dream – an Update Mike Buchanan (PDF format; 5 pages; 24k). Assessing the IMF’s Future: It’s Role, Relevance and Prospective Reform John Lipsky, Vice Chairman, JPMorgan, November 20, 2005 (PDF format; 9 pages; 48k). What Should We Think About When We Think About Refounding the International Monetary System? (PDF format; 32 pages; 59k). J. Bradford DeLong, U.C. Berkeley and NBER, July 2004 The Bretton Woods Conference of sixty years ago provided the underpinnings for the "Thirty Glorious Years": the fastest period of worldwide economic growth the world had ever seen. What issues will the people of the future wish we had talked about today? Problems of harmonization; problems of political management; and problems of economic autonomy. What reforms of the international monetary system today will put us in a good position to deal with these potential stresses on the world economy tomorrow? Direct Investment, Rising Real Wages and the Absorption of Excess Labor in the Periphery (PDF format; 15 pages; 76k). Michael P. Dooley, David Folkerts-Landau and Peter Garber, June 2004 Could the development problem be solved by increasing the growth rate of manufactured exports to developed countries in substitution for primary products? Often, developed countries act to block access to manufactured imports from cheap labour countries to protect domestic workers. Some emerging markets in Asia have found a way around this obstacle to development. The solution has created the basic features of the current international monetary system. Global Imbalances and the Lessons of Bretton Woods (PDF format; 41 pages; 305k). Barry Eichengreen, NBER, May 2004 The international system is composed of a core, which has the privilege of issuing the currency used as international reserves, and a periphery, which is committed to export-led growth based on the maintenance of an undervalued exchange rate. In the 1960s, the core was the United States and the periphery was Europe and Japan. Now, the new periphery is Asia, but the same core, the United States, still lives beyond its means. This imagines the existence of a cohesive periphery ready and able to act in their collective interest. However, the countries of Asia constituting the new periphery are unlikely to be able to subordinate their individual interest to the collective interest. This also overlooks how the world has changed since the 1960s. Even if there exists today something vaguely resembling the Bretton Woods System, it is not long for this world. Institutions to Promote Financial Stability: Reflections on East Asia and an Asian Monetary Fund (PDF format; 27 pages; 151k). Gordon de Brouwer A regional financial architecture has started to emerge in East Asia. One aspect of regional financial arrangements that comes up in discussion from time to time is a regional fund or, more specifically, an Asian Monetary Fund (AMF). This paper looks at some issues about the design of a possible AMF. It seeks to contribute to the preliminary debate by canvassing some of the principles that are useful in thinking about the responsibilities of a regional fund and its organisation. It aims to look at practical ways to ensure that a regional institution is designed to maximise the likelihood of its success. The Return to Soft Dollar Pegging in East Asia Mitigating Conflicted Virtue (PDF format; 38 pages; 281k). Ronald McKinnon, Stanford University & Gunther Schnabl, Tübingen University, July 2004 Before the 1997-98 crisis, the East Asian economies—except for Japan—informally pegged their currencies to the dollar. These soft pegs made them vulnerable to a depreciating yen thereby aggravating the crisis. Dollar pegs are entirely rational from the perspective of each Asian country—both to facilitate hedging by merchants and banks against exchange risk, and to help central banks anchor their domestic price levels. Post-crisis, as the East Asian economies transform themselves from being dollar debtors into dollar creditors, they face “conflicted virtue”: pressure to appreciate their currencies that could lead to a deflationary spiral. Rather than undervaluing their currencies to promote exports as is commonly alleged, East Asian governments are trapped into returning to—and then maintaining—soft dollar pegs. US Current Account Deficit and Future of the World Monetary System (PDF format; 7 pages; 1k). Robert Skidelsky This paper seeks to challenge the conventional view that generalised floating is the desirable and inevitable goal of the international monetary system. It argues that the breakdown of 20th century fixed exchange-rate systems was due more to the privileged position of the United States in the system than to inherent weaknesses arising from domestic political pressures or financial liberalization. The problem of adjustment is not solved by generalized floating, as the question of who adjusts to whom remains. It was to avoid a repetition of the currency wars of the 1930s that the Bretton Woods system of fixed exchange rates adjustable by agreement was set up in 1944. This still seems to be the best model for a globalizing economy.