Volcker Calls for New Bretton Woods
June 2, 2014 JC Collins
(Or How I Learned to Hate the Dollar and Love the SDR)
On May 21, 2014 at the annual meeting of the Bretton Woods Committee, Paul Volcker made comments supporting the concept of a New Bretton Woods. Much of what he had to say supports the ongoing thesis here at Philosophyofmetrics.
Here are some excerpts. – JC
“Where was an effective adjustment mechanism?
Was the “exorbitant privilege” of the dollar as a reserve currency also a “dangerous temptation” to procrastinate – an impediment to timely policy adjustments, risking eventual breakdown?”
“Implicitly, bits and pieces of needed reform are being recognized by strong efforts to standardize commercial bank capital requirements and, for the first time, to introduce liquidity standards.
The need for official oversight and surveillance beyond the commercial banking system is well recognized, even if much remains to be done to develop and standardize practices.
There is effort underway to achieve a common approach toward the resolution of failing financial institutions of systemic importance; it is hard to perceive of any successful resolution process that proceeds only nationally.”
“The creation of the G-20 at the exalted level of Presidents and Prime Ministers has been a political accomplishment. The agreed changes in IMF governing structure are important in achieving a sense of political legitimacy for its governing structure and decision-making. But that is not enough – it means little without substantive agreement on the need for monetary reform and practical approaches toward that end.”