SDR’s and the New Bretton Woods – Part Six

“In recent decades, emerging and developing economies have become bigger players in the global economy. However, their representation at the IMF has not kept pace with these changes. The G20 will continue to pursue reforms to the IMF during 2014 to ensure that country representation at the IMF better reflects the economic weight of its members. These changes will build greater confidence in the IMF’s ability to respond to global economic instability.”

–          Statement on Reforming Global Institutions on the G20 Website

 

There is a unique game of chess taking place on the global economic scene.  And like all good games of chess against worthwhile opponents it takes patience and calculation to strategize every move well in advance.  This particular game began in 2010 when the G20 countries all agreed to enact the International Monetary Fund’s Governance Reforms (or Code of Reforms) to change the quota amounts for member countries and restructure the Executive Board to more accurately reflect the changing dynamics of the world economy.

With the full implementation of these reforms we will see all the currencies of the world that are now pegged to the value of the U.S. dollar shift to a more balanced system of weight values and be pegged to the value of the SDR (Special Drawing Right) as issued by the International Monetary Fund.

The SDR was originally meant as a form of credit but since the collapse of 2008 has been slowly transitioning into a form of money, or currency.  Some of the reasons for the expanded use of the SDR can be found in sets of problems and remedies.  Which are:

Problems in the international monetary system:

Persistent Global ImbalancesLarge and Volatile Capital FlowsUnstable Exchange Rate Fluctuations Not Based on FundamentalsInsufficient Supply of Reliable Global Assets

Remedies for the international monetary system:

Global Policy Collaboration and Stronger System SurveillanceEnhanced Systemic Financial Safety NetFinancial Deepening in Emerging MarketsDevelopment of New Reserve Assets

It’s the last item, development of new reserve assets, which we will focus on in this installment of the SDR and the New Bretton Woods series.

But first let us address the issue of corruption and rampant conspiracy theories which are overshadowing the real process and strategies which are taking place on the global scene.  Next week the 2014 G20 Summit is taking place in Australia.  Two of the many priorities for the G20 this year are anticorruption and reforming global institutions.

philosophyofmetrics

Consolidation or Collapse, and Conspiracy Theories

By JC Collins

Old Strategies

“In recent decades, emerging and developing economies have become bigger players in the global economy. However, their representation at the IMF has not kept pace with these changes. The G20 will continue to pursue reforms to the IMF during 2014 to ensure that country representation at the IMF better reflects the economic weight of its members. These changes will build greater confidence in the IMF’s ability to respond to global economic instability.”

–          Statement on Reforming Global Institutions on the G20 Website

 

There is a unique game of chess taking place on the global economic scene.  And like all good games of chess against worthwhile opponents it takes patience and calculation to strategize every move well in advance.  This particular game began in 2010 when the G20 countries all agreed to enact the International Monetary Fund’s Governance Reforms (or Code…

View original post 2,281 more words

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s