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The paper treats the eco currency union project in West Africa and its implications for monetary policies against the backdrop of the international monetary order from a post-Keynesian perspective. The eco zone project envisions a common monetary union of the West African Economic and Monetary Union (WAEMU), i.e. the independent Western subzone of the CFA franc union, and the remaining non-CFA countries of the Economic Community of West African States (ECOWAS) with Nigeria and Ghana as the economically most important member states. The literature on the international currency hierarchy developed by Latin-American structuralists and the post-Keynesian Berlin School of thought focuses on the notion of a currency-specific liquidity premium that structurally determines the interest rate level in the corresponding currency areas. Based on this set of literature, we conduct a comparison between the liquidity premia of the Western CFA-franc, the Nigerian naira and the Ghanaian cedi to make conjectures about what implications a common ECOWAS currency union would have regarding monetary policy space. Being a non-pecuniary variable, the liquidity premium cannot be observed directly. We therefore approximate the liquidity premium by calculating differences in interest rates such as the central bank’s base rate, the coupon rate on T-bills and bonds and the interest rate spread between Eurobonds and bonds denominated in local currency. Besides, we use balance of payment data to identify external financial fragilities that might become a crucial factor for monetary policy due to an increasing financialisation in West African economies. We find that investors demand structurally higher yields on bonds originating in Ghana and Nigeria than in the CFA-franc zone. One could interpret this as the FA-franc conveying over a higher liquidity premium because it has to have lower yields rates to compensate for liquidity-differences to financial assets denominated in the US dollar or euro. However, another explanation is that expectations about the future developments of the cedi’s and naira’s exchange value by investors are more pessimistic in comparison to that of the CFA-franc. This is rooted in two major factors: Firstly, under the current arrangement, France still has leeway in monetary policy making and acts as exchange rate stabiliser by pushing for restrictive monetary policies and guaranteeing foreign exchange reserve provision. Secondly, the estimation of external financial fragility in the WAEMU, Nigeria and Ghana shows that the naira implies a greater risk of sudden devaluation compared to the Western CFA franc and the cedi due to Nigeria’s higher exposure to mobile liabilities vis-à-vis its asset endowments.

The global financial crisis, which had its centre-point in the United States, raised speculation about the US dollar’s imminent displacement as the world’s largest international currency. Many scholars and financial analysts were predicting the end of the US dollar’s dominant role in the international monetary system. Krugman (2007), for example, wrote that "almost everyone believes that the US current account deficit must eventually end, and that this end will involve dollar depreciation (p.1)". The World Bank and the International Monetary Fund also predicted a decline in the US dollar’s value and the consequences this would inevitably have for the global economy. But these analysts, at least for now, have been proven wrong, since the opposite has happened. During the height of the crisis, money was flowing back into the United States, and foreign investors, who were searching for a safe-haven currency for their money, added to the inflow. After the dollar dethroned the British pound – be it after World War II, as some scholars argue, or as early as the 1920s – the US dollar has been the world’s leading global currency. The end of the gold standard in 1973 did not upset the dollar’s role within the international monetary system, but the growing gap of the US economy and financial markets compared to other economies enhanced the dollar’s status as the most powerful currency in the world. The question whether the dollar is losing its international role first emerged seriously in the 1990s, when the Deutsche Mark and Japanese Yen had made increasing gains during the 1970s and 1980s. The strong German and Japanese economies, low inflation, and a current surplus suggested that the US dollar might be dethroned. But this event did not occur. The introduction of the Euro in 1999 was the first serious competitor to the dollar in the post-war era. The European Monetary Union has been a fusion of Europe’s economic power, and its influence in the global economy can challenge the US economy and consequently the role of the US dollar. But the European Sovereign Debt Crisis has challenged the Eurozone, and so far the Euro is lagging behind the US dollar. This dissertation stands as a reflection of my broad interest in the monetary policy of developing countries. There is a wide body of literature that covers different aspects of this field of study, but the list of questions that have not been fully unanswered remains long. My thesis takes a different evolutionary course to contribute to our understanding of the future structure of the international monetary system. While the three chapters address a range of different monetary policies and contexts, they are bound together by this common interest and by the way that they complement each other. The discussions and conclusion of this dissertation will give an updated framework for the future of the international monetary system.

Im November 2016 einigte sich Ägypten mit dem Internationalen Währungsfonds (IWF) auf ein umfassendes Hilfsprogramm. Erklärtes Ziel war es, das Land innerhalb von drei Jahren makroökonomisch zu stabilisieren und auf einen inklusiven wirtschaftlichen Wachstumspfad zu führen. Zur Halbzeit wird deutlich: Die damals gesetzten Konditionalitäten ermöglichten zwar eine kurzfristige makroökonomische Stabilisierung, Strukturreformen haben sie aber kaum zur Folge. Vielmehr wird die Herausbildung einer funktionierenden Marktwirtschaft von dem zunehmend einflussreichen Militär verhindert. Hinzu kommt die desaströse Menschenrechtsbilanz der Regierung unter Präsident Abdel-Fatah al-Sisi, die sich ebenfalls negativ auf die wirtschaftliche Entwicklung Ägyptens auswirkt. Deutschland hatte maßgeblichen Anteil am Zustandekommen des IWF-Abkommens. Die Bundesregierung sollte daher darauf hinwirken, dass der IWF die bisherigen Reformen kritischer bewertet. Zudem sollte sie ihre Bereitschaft zur Unterstützung zukünftiger Hilfspakete an eine Verbesserung der Menschenrechtslage und eine Stärkung der Zivilgesellschaft binden. (Autorenreferat)

The world economy has not still recovered from the effects of the financial crisis that began almost a decade ago first in the US and then in Europe. Policy response to the crisis, the combination of fiscal restraint and ultra-easy monetary policy, has not only failed to bring about a robust recovery but has also aggravated systemic problems in the global economy, notably inequality and chronic demand gap, on the one hand, and financial fragility, on the other. It has generated strong destabilizing spillovers to the Global South. Major emerging economies that were expected a few years ago to become global locomotives have not only lost their momentum, but have also become highly vulnerable to trade and financial shocks. Policies proposed by the new administration in the US could entail a double blow to emerging and developing economies which have become highly dependent on foreign markets, capital and transnational corporations. The EU remains a global deadweight, generating deflationary impulses for the rest of the world economy. The jury is still out on whether the second largest economy, China, will be able to avoid financial turmoil and growth collapse. This state of affairs raises serious policy challenges to the Global South in responding to external shocks and redesigning the pace and pattern of their integration into the global economy so as to benefit from the opportunities that a broader economic space may offer while minimizing the potential risks it may entail.

Robert Triffin (1911-1993) played an important role in the international monetary debates in the postwar period. He was known as one of the main advocates of a multipolar international monetary system. In this paper we analyse the origins of Triffin's "regional" approach towards international monetary integration. We argue that Triffin's experience with the European Payments Union (EPU) played hereby a crucial role. Triffin was not only an "architect" of the EPU, but the EPU also led to an important shift in Triffin's view of the geography of the international monetary system. Before his work on the EPU, Triffin thought of the international economy as composed of two geographical entities: national economies and the world economy. With his work on the EPU he introduced a third geographical entity: the region. The EPU would so be at the basis of Triffin's advocacy of a regional approach towards international monetary integration. Moreover, while Triffin was initially quite positive on the IMF, he became, through his EPU experience, more critical of the IMF and its worldwide approach.

China hat erste Schritte unternommen, die auf eine Internationalisierung des Renminbi hindeuten. So hat das Land vorsichtige Maßnahmen zur Öffnung der Kapitalbilanz getroffen und 2005 Währungsschwankungen innerhalb einer engen Bandbreite zugelassen. Die Nutzung von Hongkong als Prüfstein für eine Internationalisierung des Renminbi ermöglicht die Entwicklung eines Offshore-Renminbi-Marktes. In diesem Zusammenhang bedeutete die stillschweigende erneute Anbindung des Renminbi an den US-Dollar im Jahr 2008 einen Rückschritt auf dem Wege der Internationalisierung. Statt den Renminbi erneut an eine fremde Währung zu binden, sollte China die Bandbreite für den Handel mit dem Renminbi allmählich vergrößern. Eine unabhängige Geldpolitik und ein freier Devisenhandel sind zwei der Eckpfeiler eines modernen Finanzwesens. Die Liberalisierung der Kapitalbilanz ist ein gradueller Prozess und sollte Hand in Hand mit der Etablierung eines starken chinesischen Finanzsektors gehen. Sobald dieser ausländisches Kapital auf flexible, unabhängige Weise absorbieren kann, hat der Renminbi gute Chancen, sich zu einer angesehenen internationalen Währung zu entwickeln.

In letzter Zeit wurden einige kritische Äußerungen zur Rolle des US-Dollar als Leitwährung laut. Sollte er als Weltleit- und Reservewährung ersetzt werden? Lukas Menkhoff, Universität Hannover, sieht den US-Dollar »längst in der Phase des Siechtums als internationale Leitwährung«. Der US-Dollar werde als Leitwährung abgelöst, wofür mehrere Szenarien denkbar seien. Für Stephan Schulmeister, Österreichischen Institut für Wirtschaftsforschung, Wien, ist die Globalisierung ohne supranationale Währung ein »fataler Widerspruch«. Eine immer stärker globalisierte Wirtschaft brauche eine echte Weltwährung, denn ansonsten gebe es einen unlösbaren Grundkonflikt zwischen den »nationalökonomischen« Interessen des Leitwährungslandes und den »globalökonomischen« Interessen der Weltwirtschaft. Bernd Kempa, Universität Münster, hingegen sieht gegenwärtig den US-Dollar als Leitwährung alternativlos. Zudem werde im Zuge einer Korrektur der globalen Ungleichgewichte der Dollar wieder an Vertrauen und Glaubwürdigkeit gewinnen. Norbert Walter, Deutsche Bank Group, weist darauf hin, dass es bei einer Änderung der Weltreservewährung nicht vorrangig um den Wert des Instruments, sondern um Kosten und Koordinierung dieser Ablösung geht. Dies komme dem Dollar derzeit zu Gute. Außerdem seien zwingende Argumente für eine bestimmte Währungsalternative derzeit nicht vorhanden.

A sketch of the International Monetary Fund’s 70-year history reveals an institution that has reinvented itself over time along multiple dimensions. This history is primarily consistent with a "demand driven" theory of institutional change, as the needs of its clients and the type of crisis changed substantially over time. Some deceptively "new" IMF activities are not entirely new. Before emerging market economies dominated IMF programs, advanced economies were its earliest (and largest) clients through the 1970s. While currency problems were the dominant trigger of IMF involvement in the earlier decades, banking crises and sovereign defaults became they key focus since the 1980s. Around this time, the IMF shifted from providing relatively brief (and comparatively modest) balance-of-payments support in the era of fixed exchange rates to coping with more chronic debt sustainability problems that emerged with force in the developing nations and now migrated to advanced ones. As a consequence, the IMF has engaged in "serial lending", with programs often spanning decades. Moreover, the institution faces a growing risk of lending into insolvency, most widespread among low income countries in chronic arrears to the official sector, but most evident in the case of Greece since 2010. We conclude that these practices impair the IMF’s role as an international lender of last resort.

The dollar's steady depreciation has had little impact on the official reserves of central banks. As scholars of the international monetary system debate whether the dollar can continue to play the dominant role in the international monetary system, actual developments in exchange relations already give reason to expect that the world's currency regime is changing. Recent measures taken by China to internationalize its renminbi, including several bilateral swap agreements signed with other central banks, have reinforced other eastward trends in the world economy. In this paper, China's acceleration of renminbi internationalization is examined. The growth of renminbi-based trade and settlements has made it Asia's new reference currency, surpassing the US dollar. These developments are mostly due to the effects of the financial crisis and have been supported by the region's economic and financial integration. As a reference currency of necessity or choice, the emergence of the renminbi in Asia is set to weaken the current global dominance of the US dollar. In conclusion, the paper makes the case that the growth of the renminbi as an international currency could generate a multipolar currency system that balances and distributes responsibilities in a better way than the current currency regime.

The squeeze in United States dollar liquidity that emerged with the global financial crisis highlighted the risks inherent in the current global financial system. Asia was adversely affected by the crisis not only because of its dependence on trade, but also because of its heavy reliance on the US dollar for regional and international transactions. As Asia's role in the global economy continues to expand, its dependence on the US dollar is bound to increase, raising further its vulnerability to future liquidity shocks. The use of regional currencies for bilateral trade settlement could reduce such vulnerability. As demonstrated by the renminbi trade settlement scheme piloted between the People's Republic of China; Hong Kong, China; and Macao, China, the existence of appropriate financial infrastructure could reduce the relatively larger costs of bilateral currency transactions compared with triangular transactions through the United States dollar. As most central banks are securities depositories of government bonds, combining trade settlement with government bond securities settlement could also have large synergy effects without substantial extra costs. This proposal does not require full liberalization of the capital account or full deregulation of capital markets, and is more politically feasible in transition. As such, extending the trade settlement scheme to the rest of Asia and appending a government bond payment and securities settlement system could be a practical solution to international monetary system reform and the diversification of settlement currencies.

Durch die fortschreitende Entwicklung internationaler Finanzmärkte hat eine Politik der unilateralen Wechselkursfixierung gegenüber dem US-Dollar oder dem Euro an Glaubwürdigkeit verloren. Den Ländern im Rest der Welt bieten sich heute drei Optionen zur Senkung ihres Wechselkursrisikos: Erstens die weitgehende Flexibilisierung des Wechselkurses, wodurch ein Stabilitätsimport unmöglich wird, zweitens die Einführung einer stabilen Fremdwährung (Dollarisierung, Euroisierung) und drittens die regionale monetäre Integration mit dem Ziel der Einführung einer Gemeinschaftswährung. Diese Arbeit untersucht die Bedingungen für die Vorteilhaftigkeit einer der drei Optionen. Es zeigt sich, dass die überwiegende Anzahl der Länder im "Rest der Welt" weder die Bedingungen für eine Flexibilisierung des Wechselkursesnoch die für die Einführung einer Fremdwährung erfüllt. Für diese Länder stellt, zumindest langfristig, eine regionale Gemeinschaftswährung die first best Lösung dar. Die Hauptvorteile liegen dabei auf der Finanzmarktseite. Gegenüber der Dollarisierung ist die regionale Gemeinschaftswährung mit einer höheren Finanzmarktstabilität verbunden, gegenüber der Flexibilisierungsstrategie ermöglicht eine regionale Gemeinschaftswährung eine höhere Liquidität auf regionalen Finanzmärkten. Beide Ergebnisse führen zu einer höheren Wechselkursstabilität.

In the wake of several major crises, in which it played a highly controversial role, the IMF has recently come under heavy fire from various quarters. A number of proposals for reform have been put forward, of which the report of the Meltzer Commission has attracted particularly widespread attention. The authors analyze this and some competing reform proposals using the “trilemma of economic integration”, which the US Treasury Secretary, Lawrence Summers, suggested as a common framework for investigation.

Der IWF wurde nach der Rußland- und Ostasienkrise kritisiert, weil sein Eingreifen die ausländischen Gläubigerbanken, die vor allem kurzfristige Kredite vergeben hatten, aus der Verantwortung entließ. In welcher Form könnten die Banken stärker in die Pflicht genommen werden? Professor Karl-Ernst Schenk plädiert für eine weitestgehende Privatisierung des Liquiditätsrisikos der Banken durch einen Unterbau des IWF aus föderal strukturierten Liquiditätssicherungsfonds.

The European Union is striding ahead on schedule towards European monetary union (EMU). Eleven member states will introduce the euro for book-keeping purposes on 1.1.1999, assigning responsibility for monetary policy to the European System of Central Banks. On 1.1.2002, the euro will also be in circulation as notes and coins, and the participating countries will abandon their national currencies by 30.6.2002 at the latest. But what part will the euro play in the world monetary system? And what conclusions do we need to draw?

Die Europäische Union schreitet auf ihrem Weg zur Europäischen Währungsunion weiter planmäßig voran. Zum 1.1.1999 werden elf EU-Länder den Euro als Buchgeld einführen und ihre Währungspolitik auf das Europäische System der Zentralbanken übertragen. Zum 1.1.2002 wird der Euro, auch Bargeld, und spätestens am 30. 6. 2002 werden die Teilnehmerländer ihre nationalen Währungen aufgeben. Welche Rolle wird der Euro im Weltwährungssystem spielen? Welche Konsequenzen ergeben sich daraus?

The squeeze in US dollar liquidity that emerged with the global financial crisis highlighted the risks associated with the current global financial system. Asia was adversely affected by the crisis not only because of its dependence on trade, but also because of its heavy reliance on the US dollar for regional and international transactions. As Asia's role in the global economy expands further, its dependence on the US dollar is bound to increase, raising even more its vulnerability to future liquidity shocks. The use of regional currencies for bilateral trade settlement could reduce such vulnerability. As demonstrated by the renminbi trade settlement scheme piloted between the People's Republic of China and Hong Kong, China, the existence of appropriate financial infrastructure could reduce the relatively larger costs of bilateral currency transactions compared with triangular transactions through the US dollar. As most central banks are securities depositories of government bonds, combining trade settlement with government bond securities settlement can also have large synergy effects without much extra costs. This proposal does not require full liberalization of the capital account or full deregulation of capital markets, and is more politically feasible in transition. As such, extending the trade settlement scheme to the rest of Asia and appending a government bond payment and securities settlement system could be a practical solution to international monetary system reform and the diversification of settlement currencies.

The Chiang Mai Initiative Multilateralisation (CMIM) and the ASEAN+3 Macroeconomic Research Office (AMRO), established in March 2010 and May 2011, respectively, have made substantial headway. But despite the rapid progress, a series of fundamental questions have been raised, particularly about the size of the CMIM facility. Although CMIM funding was doubled to $240 billion, effective since May 2012, the swap amount has frequently been criticized as insufficient. Another fundamental issue that still needs to be agreed upon is the CMIM's role and how it fits in among existing regional and global financing facilities. AMRO's surveillance work is seen as vital to the overall success of the CMIM in regional financial cooperation. As other multilateral institutions involved in surveillance work have experienced, effective surveillance to support regional financial cooperation is a complicated task, strewn with obstacles. The primary task of this paper is to suggest possible areas in which the effectiveness of the CMIM and AMRO may be increased, despite constraints and limitations.

The paper scrutinizes the spillover effects of expansionary monetary policies of a center economy to the macroeconomic policies of periphery countries, dependent on the exchange rate regime. In particular the impact of the US quantitative easing on the Chinese economy is analysed. The results suggest that the exchange rate regime plays a minor role in insulating the economies at the periphery of the world monetary system from monetary policy shocks in the center. The only exception is capital controls which enable the periphery countries, in particular China, to maintain a certain degree of monetary independence in the short run. In the long run a closer Chinese-European policy coordination is argued to create a counterbalance to the predominance of the US dollar in the currently asymmetric world monetary system. This would provide an incentive to the US to phase out undue monetary expansion.

This paper reviews some of the current debates on the reform of the international monetary system. Despite its deficiencies, the United States (US) dollar will remain the dominant currency and Special Drawing Rights (SDR) cannot serve as either an international medium of exchange or a reserve currency. The International Monetary Fund (IMF) has changed its position to accept capital controls under certain circumstances. Refining control instruments better tuned to present day markets may bring about greater acceptance. The 2008-2009 global financial crisis has dimmed much of the earlier hope for the multilateralized Chiang Mai Initiative. The currency swap arrangements portend a new form of international cooperation. Finally, for the Group of Twenty (G20) to matter, the systemically important countries need to ensure the stability of their financial systems and economies.

The paper identifies based on the monetary overinvestment theories by Wicksell (1898), Mises (1912) and Hayek (1929) monetary policy mistakes in large industrial countries issuing international currencies. It its argued that a neglect towards monetary policy reform in a world dominated by financial markets has led to the erosion of the allocation and signaling function of the interest rate, which has triggered an excessive rise of the government debt and structural distortions in the world economy. The backlash of high government debt levels on monetary policy making is argued to have led to a hysteresis of the liquidity trap. In this context, monetary reform is discussed with respect to the exit from low interest rate and high debt policies, an adaption of monetary policy rules to financial market dominated economic development, and the displacement of the prevalent world monetary system. Enhanced competition between dollar and euro as international currencies moderated by East Asia is proposed to constitute a more stable international monetary system.

Robert Triffin became famous with his trenchant analyses of the vulnerabilities of the Bretton Woods system. These are still at the center of many discussions today. This paper argues that there is a remarkable continuity in Triffin's work. From his earliest writings, Triffin developed a vision that the international adjustment process was not functioning according to the classical mechanisms. This view was based on thorough empirical analyses of the Belgian economy during the Great Depression and shaped by a business cycle perspective with an emphasis on the disequilibria and the transition period. His doctoral dissertation on imperfect competition theory and his Latin American experience further reinforced this basic view.

As China's economic might grows, its standing and that of its currency in the international monetary system become increasingly pressing issues. The crisis seems to have reminded the Chinese authorities of the dangers of a unipolar monetary system, and they have therefore accelerated their plans to internationalise the renminbi (RMB). The goal of this internationalisation strategy is not clear and China has not defined publicly the monetary system it aims to achieve. Nevertheless, there are more and more signs that the internationalisation of the RMB is progressing, notwithstanding major challenges. Conventional wisdom and the majority of the literature posits that the RMB will not succeed in its internationalisation process until China fully opens its capital and financial accounts, makes its exchange rate flexible and liberalises its financial sector. These three obstacles are real but circumventable. However, if China's internationalisation strategy follows a path that concentrates on overcoming immediate challenges in order to raise the status of the RMB to that of a second-tier world currency, the Chinese authorities will still have to undertake substantial reforms if they intend to place the RMB on a footing comparable to the dollar or the euro.

We analyze three related but distinct concepts concerning the renminbi's role in the global monetary system: (i) internationalization of the currency; (ii) currency convertibility; and (iii) reserve currency status. Their sequencing in relation to other policy goals such as financial sector reforms and exchange rate flexibility will affect their benefit-risk tradeoffs. We describe the measures taken and progress attained in each of these areas, and discuss the implications of these changes for the balance and sustainability of China's own economic development as well as the associated implications for the global monetary system. While China is actively promoting the internationalization of its currency, it is a long way from attaining full convertibility or meeting other prerequisites for achieving reserve currency status. Ultimately, China will proceed with capital account convertibility in its own controlled and gradual manner, with the goal being an open capital account but with significant administrative and other soft controls. The renminbi will play an increasingly important role in the international monetary system but is unlikely to displace the U.S. dollar anytime soon.

The rise of regional monetary arrangements poses a challenge for the International Monetary Fund (IMF)'s global surveillance efforts. This paper reviews how the IMF has responded to earlier regional initiatives, from the European Payments Union of the 1950s and the Gold Pool of the 1960s to the CFA franc zone and the European Monetary System. The penultimate section draws out the implications for monetary regionalism in East Asia.

The current global financial “non-system” is marked by instability. In the absence of global solutions, a series of regional arrangements of monetary cooperation have been emerging to cope with such instability. The paper focuses on regional payment systems as an initial step of regional monetary cooperation. In order to evaluate their potential contribution to increase macroeconomic stability of the member countries, we develop a typology of payments systems and systematically compare historic and present initiatives in Europe, Asia and Latin America with reference to the original Keynes Plan. We show that regional payment systems entail beneficial effects by reducing transaction costs of intraregional trade, and by creating incentives for further macroeconomic cooperation. Their contribution to macroeconomic stabilization however depends on the specific design of the respective regional arrangement.

1\. Introduction 5 2\. Domestic Stability or International Coordination 7 3\. State Preferences and Institution Design 10 3.1 Domestic Factors 10 3.2 International Factors 12 3.3 Method 13 4\. From Non-Coordination to Direct Negotiation 14 4.1 Non-Coordination Period 14 4.2 Direct Negotiation and Country-Specific Recommendation 15 4.3 Coordination and Surveillance 17 4.4 Obstacle of Coordination 18 5\. The EU: From the EMS to the EMU 19 5.1 The Delors Report: Framing the Problem 19 5.2 The EU and Inflation Targeting 20 5.3 The EU as the a Promoter of Central Bank Independence 21 6\. The BIS and the IMF Research Department 22 6.1 The BIS 22 6.2 IMF Research Department 23 7\. The Internationalization of the Norm of Price Stability Targeting 24 7.1 World Economic Outlook: Institutionalization of the Norm of Inflation Targeting 25 8\. Analysis and Conclusion 26 Literature 29 Appendix 34, During the 1990s, a consensus consolidated among policy makers and economists worldwide regarding the desirability of very low inflation targeting. So far, this process has been explained on the basis of a domestic-functional thesis, according to which commitment to very low inflation provides local economic gains with no costs. In this paper, I present an alternative explanation, according to which the global norm of very low inflation targeting was consolidated as a political solution to the problem of exchange rate misalignment and volatility. I argue that policy makers in Germany and the US believed that convergence of monetary policies and inflation rates, in addition to liberalization of financial markets, will stabilize exchange rates without the need for direct coordination. The paper employs the theory of liberal intergovernmentalism as a benchmark to explain the choice of the European and the G-5/7 countries to establish a low-inflation rule-based international monetary regime. The paper concludes that the regime of very low inflation targeting was consolidated as a politically viable solution to a political problem rather than as an economic best practice. Furthermore, it concludes that the norm of very low inflation targeting was a “corer solution” that neglected the problem of exchange rate stability.

Zu den Prioritäten der französischen G20-Präsidentschaft zählt eine Stärkung und Stabilisierung des internationalen Währungssystems. Dabei verfolgt Paris das Ziel einer größeren strukturellen Symmetrie des Währungssystems, die jedoch kaum zu realisieren sein wird. Zugleich stellt für Frankreich der Abbau von makroökonomischen Ungleichgewichten einen wichtigen Schritt zu mehr Stabilität dar. Die Stärkung der Finanzmarktregulierung bildet die zweite Priorität der französischen Präsidentschaft. Ergänzend zu einer Verschärfung der Kontrolle des Finanzsektors - ein Thema, das seit Beginn der Finanzkrise einen wichtigen Platz auf der Agenda der G20 einnimmt - möchte Frankreich den Kampf gegen Regulierungs- und Steuerparadiese fortsetzen. Die soziale Dimension der Globalisierung stellt einen weiteren Punkt der französischen Agenda dar. Mit den Themen Regulierung der Rohstoffmärkte sowie Beschäftigung und soziale Sicherung setzt Frankreich hierbei neue Akzente, die jedoch zugleich Spannungen zwischen Nord- und Südstaaten der G20 zu Tage treten lassen. Obwohl die G20 zu einem der wichtigsten internationalen Foren geworden ist, scheint Optimismus wenig angebracht. So kann sich das Gremium jeweils nur einigen der zahlreichen Herausforderungen der globalen Wirtschaft widmen, und die große Vielfalt seiner Mitglieder macht einen tragfähigen Konsens unwahrscheinlich. Durant sa présidence du G20 en 2011, la France souhaite contribuer au renforcement et à la stabilisation du Système monétaire international. À cette fin, elle vise à la fois un fonctionnement moins asymétrique du SMI, qui a cependant peu de chance d'aboutir, et la réduction des déséquilibres macroéconomiques internationaux. Parmi les priorités que Paris veut approfondir se trouve également le renforcement de la régulation financière. Parallèlement à la mise en place d'un meilleur contrôle du secteur financier, qui a émergé sur l’agenda du G20 avec la crise financière, la France aimerait poursuivre la lutte contre les juridictions dites non coopératives. La présidence française du G20 souhaite enfin traiter de la dimension sociale de la mondialisation et fixe ce faisant quelques priorités novatrices: d'une part la régulation des marchés de matières premières; d'autre part les questions liées à l'emploi et à la protection sociale, qui font l'objet d'un clivage Nord-Sud. Alors que le G20 est devenu une structure de concertation internationale de premier plan, l'optimisme n'est pas de mise. Non seulement le G20 ne peut se concentrer que sur quelques questions centrales pour l'économie mondiale, mais la grande diversité de ses membres rend également très improbable l'obtention d’un consensus fort. During its G20 presidency in 2011, France wished to contribute to the reinforcement and stabilization of the International Monetary System. For this purpose, France aimed for a less asymmetric functioning of the IMS, though it has few chances to be put into action, and at the same time a reduction of international macroeconomic imbalances. Among other French priorities is the strengthening of financial regulation. Parallel to a greater control of the financial sector, which has been put on the G20 agenda as a reaction to the financial crisis, France also would like to continue the fight against non-cooperative jurisdiction. The French G20 presidency also wishes to address the social dimension of globalization and thus to define some groundbreaking priorities: on one hand stricter regulation of the commodity market and on the other hand to address the North-South divide between opinions on employment and social insurance. Even though the G20 has become a leading mechanism for international concertation, there is no reason for optimism. Not only does the G20 focus merely on a small selection of questions of global economy, but also the diversity of its members makes it unlikely to reach a strong consensus.

Many have argued that the major source of the existing global macroeconomic imbalances are the twin deficits of the United States (US). However, there is still a debate about whether the global imbalances indeed pose a significant threat to the world economy. This matter is settled by arguing that the global imbalances acted as a "handmaiden" to the 2008 financial crisis. One way to reduce global imbalances is to reform the international monetary system and reduce the role of the US dollar as a reserve currency. Robert Triffin was one of those critical of this "exorbitant" privilege granted to the US, which makes it both a system maker and privilege taker. The Triffin Dilemma captures the fundamental instability that underlies the dollar reserve system. However, there are major obstacles to this proposal. Some analysts including Triffin cited the US security umbrella as the primary reason the US and its major allies would want to retain the role of the dollar in global trade and finance despite the underlying inequities in the system. This is related to the imbalance in global governance which is largely US-centric. The imbalance in global governance is also reflected in the dominance of the US financial system brought about by the "first-mover advantage". Because of the inertia brought about by the imbalance in global governance, economic arguments to reform the international monetary system are likely to be trumped by political reality. The paper analyzes whether current efforts in East Asia in terms of financial and monetary cooperation and rebalancing of economic growth could significantly mitigate the adverse impacts of a global system that will still be dominated by the US dollar in the foreseeable future. It also explains why the People's Republic of China (PRC) is unlikely to make significant unilateral adjustments to reduce global macroeconomic imbalances.

Though the renminbi is not yet convertible, the international monetary regime has already started to move towards a 'multipolar' system, with the dollar, the Chinese currency and the euro as its key likely pillars. This shift corresponds to the long-term evolution of the balance of economic weight in the world economy. Such an evolution may mitigate some flaws of the present (non-) system, such as the rigidity of key exchange rates, the asymmetry of balance-of-payments adjustments or what remains of the Triffin dilemma. However it may exacerbate other problems, such as short-run exchange rate volatility or the scope for 'currency wars' while leaving key questions unresolved, such as the response to capital flows global liquidity provision. Hence, in itself, a multipolar regime can be both the best and the worst of all regimes. Which of these alternatives will materialise depends on the degree of cooperation within a multilateral framework.

This paper suggests that the dollar is not threatened as the hegemonic international currency, and that most analysts are incapable of understanding the resilience of the dollar, not only because they ignore the theories of monetary hegemonic stability or what, more recently, has been termed the geography of money; but also as a result of an incomplete understanding of what a monetary hegemon does. The hegemon is not required to maintain credible macroeconomic policies (i.e., fiscally contractionary policies to maintain the value of the currency), but rather to provide an asset free of the risk of default. It is argued that the current crisis in Europe illustrates why the euro is not a real contender for hegemony in the near future.

In this paper, I put the ongoing G20 process of improving the regulation of international finance into a historically informed perspective. To understand the driving forces behind and obstacles to international cooperation in governing finance I combine concepts from international political economy and comparative political economy (IPE and CPE) that have previously been only loosely connected. Building on the IPE literature that highlights the historical and political embeddedness of financial regulation I depart from the IPE focus on the globalization of US–UK financial market capitalism. CPE studies show that, since the 1970s, different variations of capitalism have reacted in distinct ways to the collapse of the Bretton Woods system, lower growth rates and saturated domestic markets. Most notably, there has been a divergence between the approaches of financializing countries (US, UK) and export-oriented countries (Germany, East Asian nations). The interdependence between financialized and export-oriented variations of capitalism has contributed to the dynamics and crises of international finance for the past four decades. This “imbalance of capitalisms” also became an obstacle to international cooperation in regulating finance. Faced with the “trilemma of economic policies,” the financialized and export-oriented variants of capitalism have chosen different combinations of macroeconomic policies, currency policies, and the regulation of financial flows and financial firms. This divergence has led to conflicting preferences with regard to international cooperation to regulate finance. Dieses Papier betrachtet die historischen Hintergründe der Schwierigkeiten und Konflikte bei der (Re-)regulierung der internationalen Finanzbeziehungen in der G20. Diese Konflikte lassen sich besonders gut bei dem Versuch der Koordinierung von Fiskal- und Geldpolitik, der Regulierung von Banken und Finanzströmen sowie der Reduzierung globaler wirtschaftlicher Ungleichgewichte beobachten. Hierzu werden bisher nur unzureichend verbundene Ansätze aus der Internationalen und der Vergleichenden Politischen Ökonomie (IPÖ/VPÖ) kombiniert. Die IPÖ-inspirierte Betrachtung internationaler Kooperation verbunden mit dem VPÖ-inspirierten Fokus auf die pfadabhängig unterschiedlichen Spielarten des Kapitalismus ermöglicht ein besseres Verständnis der Hintergründe von Konflikten bei der Regulierung internationaler Finanzbeziehungen. Besonders berücksichtigt werden hierbei die unterschiedlichen Entwicklungen verschiedener Spielarten des Kapitalismus seit dem Zusammenbruch des Bretton-Woods-Systems Anfang der 1970er-Jahre. Die Interdependenz von finanzmarktorientiertem Kapitalismus in den Vereinigten Staaten und Großbritannien sowie exportorientierter Kapitalismusvarianten in Europa und Ostasien haben die internationalen Finanzbeziehungen in den letzten vier Jahrzehnten entscheidend geprägt. Beide Modelle unterscheiden sich ganz erheblich bezüglich der institutionellen Arrangements bei der Regulierung von Finanzbeziehungen und der Fiskal-, Geld- und Währungspolitik. Diese Unterschiede wiederum führen zu divergierenden Präferenzen und Konflikten bei der internationalen Koordinierung der Regulierung von Finanzbeziehungen. 1 Introduction 2 The imbalance of capitalisms and the dilemmas of international financial regulation The imbalance of capitalisms since the 1970s The trilemma of economic policy 3 Financialization of capitalism in the US and the UK 4 Export-oriented capitalism in Europe and East Asia 5 Conclusions References

The main strength of today’s international monetary system – its flexibility and adaptability to the different needs of its users – can also become its weakness, as it may contribute to unsustainable growth models and imbalances. The global financial crisis has shown that the system cannot afford a benign neglect of the global public good of external stability, and that multilateral institutions and fora such as the IMF and the G20 need to take the initiative to set incentives for systemically important economies to address real and financial imbalances which impair stability. We draw this core conclusion from a systematic review of the literature on the current international monetary system, in particular its functioning and vulnerabilities prior to the global financial crisis. Drawing from this analysis, we assess the existing and potential avenues, driven partly by policy initiatives and partly by market forces, through which the system may be improved.

The establishment of the European Monetary Institute (EMI), the predecessor of the European Central Bank, on 1 January 1994, was a milestone in the process of European monetary integration. In this paper, we look at the work on the international and European monetary system of Alexandre Lamfalussy, its first president. Lamfalussy pursued a threefold career: as a private banker, a central banker and an academic. Partly under the influence of Robert Triffin, Lamfalussy soon became interested in international monetary issues. This paper analyses his views on the international monetary system and on European monetary integration, including his contributions to the Delors Report, which provided the framework for European monetary union. The paper draws extensively on archival research in the Lamfalussy papers at the Bank for International Settlements and the minutes of the EEC Committee of Governors' meetings. The paper provides not only an analysis of Lamfalussy's thought on European monetary integration, but also offers crucial insight into the Weltanschauung and way of thinking of European central bankers in this period.

This paper assesses whether the international monetary system is already tripolar and centred around the US dollar, the euro and the Chinese renminbi (RMB). It focuses on what we call China’s “dominance hypothesis”, i.e. whether the renminbi is already the dominant currency in Asia, exerting a large influence on exchange rate and monetary policies in the region, a direct reference to the old “German dominance hypothesis” which ascribed to the German mark a dominant role in Europe in the 1980s-1990s. Using a global factor model of exchange rates and a complementary event study, we find evidence that the RMB has become a key driver of currency movements in emerging Asia since the mid-2000s, and even more so since the global financial crisis. These results are consistent with China’s dominance hypothesis and with the view that the international monetary system is already tri-polar. However, we also find that China’s currency movements are to some extent affected by those in the rest of Asia.

Zu den Prioritäten der französischen G20-Präsidentschaft zählt eine Stärkung und Stabilisierung des internationalen Währungssystems. Dabei verfolgt Paris das Ziel einer größeren strukturellen Symmetrie des Währungssystems, die jedoch kaum zu realisieren sein wird. Zugleich stellt für Frankreich der Abbau von makroökonomischen Ungleichgewichten einen wichtigen Schritt zu mehr Stabilität dar. Die Stärkung der Finanzmarktregulierung bildet die zweite Priorität der französischen Präsidentschaft. Ergänzend zu einer Verschärfung der Kontrolle des Finanzsektors - ein Thema, das seit Beginn der Finanzkrise einen wichtigen Platz auf der Agenda der G20 einnimmt - möchte Frankreich den Kampf gegen Regulierungs- und Steuerparadiese fortsetzen. Die soziale Dimension der Globalisierung stellt einen weiteren Punkt der französischen Agenda dar. Mit den Themen Regulierung der Rohstoffmärkte sowie Beschäftigung und soziale Sicherung setzt Frankreich hierbei neue Akzente, die jedoch zugleich Spannungen zwischen Nord- und Südstaaten der G20 zu Tage treten lassen. Obwohl die G20 zu einem der wichtigsten internationalen Foren geworden ist, scheint Optimismus wenig angebracht. So kann sich das Gremium jeweils nur einigen der zahlreichen Herausforderungen der globalen Wirtschaft widmen, und die große Vielfalt seiner Mitglieder macht einen tragfähigen Konsens unwahrscheinlich. Durant sa présidence du G20 en 2011, la France souhaite contribuer au renforcement et à la stabilisation du Système monétaire international. À cette fin, elle vise à la fois un fonctionnement moins asymétrique du SMI, qui a cependant peu de chance d'aboutir, et la réduction des déséquilibres macroéconomiques internationaux. Parmi les priorités que Paris veut approfondir se trouve également le renforcement de la régulation financière. Parallèlement à la mise en place d'un meilleur contrôle du secteur financier, qui a émergé sur l’agenda du G20 avec la crise financière, la France aimerait poursuivre la lutte contre les juridictions dites non coopératives. La présidence française du G20 souhaite enfin traiter de la dimension sociale de la mondialisation et fixe ce faisant quelques priorités novatrices: d'une part la régulation des marchés de matières premières; d'autre part les questions liées à l'emploi et à la protection sociale, qui font l'objet d'un clivage Nord-Sud. Alors que le G20 est devenu une structure de concertation internationale de premier plan, l'optimisme n'est pas de mise. Non seulement le G20 ne peut se concentrer que sur quelques questions centrales pour l'économie mondiale, mais la grande diversité de ses membres rend également très improbable l'obtention d’un consensus fort. During its G20 presidency in 2011, France wished to contribute to the reinforcement and stabilization of the International Monetary System. For this purpose, France aimed for a less asymmetric functioning of the IMS, though it has few chances to be put into action, and at the same time a reduction of international macroeconomic imbalances. Among other French priorities is the strengthening of financial regulation. Parallel to a greater control of the financial sector, which has been put on the G20 agenda as a reaction to the financial crisis, France also would like to continue the fight against non-cooperative jurisdiction. The French G20 presidency also wishes to address the social dimension of globalization and thus to define some groundbreaking priorities: on one hand stricter regulation of the commodity market and on the other hand to address the North-South divide between opinions on employment and social insurance. Even though the G20 has become a leading mechanism for international concertation, there is no reason for optimism. Not only does the G20 focus merely on a small selection of questions of global economy, but also the diversity of its members makes it unlikely to reach a strong consensus.

Wars have been the main forces shaping the international trading system in the twentieth century. The early years of the twentieth century were dominated by the international gold standard. But as a result of World War I, this system was replaced by the troubled gold exchange standards of the 1920s and 1930s. As a result of World War II the interwar system was replaced in turn by the Bretton Woods system. And as a result of inflation of the late 1960s, produced in part by America's war in Vietnam, the Bretton Woods system was replaced by the current system of flexible exchange rates. The European monetary union was a response to German reunification and the perceived need to defuse potential conflicts through a high level of economic cooperation.

The accumulated experience of emerging markets over the last two decades has laid bare the tenuous links between external financial integration and faster growth on the one hand and the proclivity of such integration to fuel costly crises on the other. These crises have not gone without learning. During the 1990s and 2000s, emerging markets converged to the middle ground of the policy space defined by the macroeconomic trilemma, with growing financial integration, controlled exchange rate flexibility and proactive monetary policy. The OECD countries moved much faster towards financial integration, embracing financial liberalization, opting for a common currency in Europe, and for flexible exchange rates in other OECD countries. Following their crises of 1997-2001, emerging markets added financial stability as a goal, self-insured by building up international reserves and adopted a public finance approach to financial integration. The global crisis of 2008-09, which originated in the financial sector of advanced economies, meant that the OECD overshot the optimal degree of financial deregulation while the remarkable resilience of the emerging markets validated their public finance approach to financial integration. The story is not over: with capital flowing in droves to emerging markets once again, history could repeat itself without dynamic measures to manage capital mobility as part of a comprehensive prudential regulation effort.