The triffin dilemma again

Edoardo Campanella

No 2009-46, Economics Discussion Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: Tiny changes in the American monetary policy can have dramatic effects on the rest of the world because of its double role of national and international currency. This is what I call the Triffin dilemma, an ever green concept in international finance. In the paper I show how it works through three examples: price of commodities, dollarization, and the international financial position of the US. I argue that to solve this situation, it would be important to create a more democratic monetary system, in which all the countries have a decision weight. In particular, I think that globalization and regionalization should be the two forces leading towards the new monetary system. The main economies should adopt the same currency through a system of fixed exchange rates (global money); developing countries should create regional monetary unions (regional money), preserving the real exchange rate as real shock absorber, but gaining in terms of time consistency and credibility.

Keywords: Triffin dilemma; global currency; regional monetary union; dollarization (search for similar items in EconPapers)
JEL-codes: F33 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-cba, nep-mon and nep-opm
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https://www.econstor.eu/bitstream/10419/28948/1/614390877.pdf (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:200946

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