U.s. Dollar Is Not Leader Of Monetary System After Finance Crisis

It is reported that a special advisor for UN Secretary General

, Jeffrey Sachs envisioned Thursday a three-pillar monetary system in place of U.S. dollar dominance in post-crisis world at an economic forum in Paris.

When commenting on international monetary system reforms. The Columbia University professor said "We can't go to a global reserve just the way that Europe can barely work with Europe reserve, we'll have multiple pillars, what's missing now is an Asian pillar in a world where Asia more being an economic center of priorities,"

We have known from the news that France, the country just took over bi-presidency of G8 and G20, hosted state ministers, prestigious economists and business leaders at a forum under the theme of "new world, new capitalism" to talk about future economic policies, reform of the international monetary system and growth and stability in the Mediterranean region.

It is reported that a UN advisor said the current economic crisis hitting many developed world resulted from the failures of financial regulation, "If you let your banking sector taking a lot of money out of regulation, in various ways, you end up with crises, and this crisis was about banking regulation and U.S. monetary policy."

As we can see from the news that U.S. dollar's role as the single global reserve currency didn't have direct link with present European debt crisis as it's a crisis of "credit link" instead of "monetary links", Sachs noted but meanwhile underlined this role has made "reserves going up all over the world" because "you are pegging to the dollar" and "the Fed is very expansionary."

He said:"What's missing is that the countries have a choice off the dollar. The euro is in crisis, but it will get out of the crisis, I believe, so the euro will be a good robust alternative, but there is no Asian alternative right now, so what I believe where really ahead is RMB or some kind of Asian cooperative arrangement will be the third pillar of the system".

"If you are an outside country of that, and U.S. continues to be very irresponsible about the currency policy, you'll move more close to Renminbi, euro and other bases, and the ability of the Fed to determine the monetary policy of so many countries will certainly diminish along with the weight of the U.S. in the world, " he concluded. The U.S. economist showed much optimism in a three-pillar system, reckoning it useful to cater for different needs.

It is reported that The two-day economic forum was opened by French Prime Minister Francois Fillon and his Greek counterpart George Papandreou. Other senior policy makers attending the forum included the French Economy Minister Christine Lagarde,UK Chancellor of the Exchequer, George Osborne, Chilean Finance Minister Felipe Larrain,Italian Finance Minister Giulio Tremonti and Polish Finance Minister Jacek Rostowski.

by: Chris Wood

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