EU-China Collaboration in the Reform of the International Monetary System: Much Ado About Nothing?

摘要

The current IMS suffers from an inherent flaw. It depends on US current account deficits for the provision of global liquidity. The larger this deficit, the greater the possibility of debasement in the value of the US dollar. This tension has long been acknowledged by policymakers in Europe, especially in France, and is now openly voiced by policymakers in emerging markets, especially in China, which is the main creditor to the United States. The Bretton Woods II configuration whereby East Asian surpluses were recycled in US dollar-denominated debt worked smoothly for some time, but the global financial crisis has shown that the Triffin dilemma has not gone away. To overcome this flaw, Chinese policymakers have urged the international community to start a debate on the reform of the IMS. France, a country that has never hidden its frustration with the exorbitant privilege of the US, has picked up the call and made this topic one of its primary objectives for its G20 presidency in 2011. The aim of the French Government has been to function as a broker between the distant positions of China and the United States. In some ways, France is in an ideal position to achieve this. Like in Beijing, in Paris, the creation of a totally flexible international exchange rate regime is seen as infeasible and perhaps even undesirable. The establishment of an exchange rate regime based on target zones has been the unspoken dominant doctrine among French financial officials since the collapse of Bretton Woods.