The International Monetary System: Living with Asymmetry

Maurice Obstfeld

No 8703, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper analyzes current stresses in the two key areas that concerned the architects of the original Bretton Woods system: international liquidity and exchange rate management. Despite radical changes since World War II in the market context for liquidity and exchange rate concerns, they remain central to discussions of international macroeconomic policy coordination. To take two prominent examples of specific (and related) coordination problems, liquidity issues are paramount in strategies of national self-insurance through foreign reserve accumulation, while recent attempts by emerging market economies (EMEs) to limit real currency appreciation have relied heavily on nominal exchange rate management. A central message is that a diverse set of potential asymmetries among sovereign member states provides fertile ground for a variety of coordination failures. The paper goes on to discuss institutions and policies that might mitigate some of these inefficiencies.

Keywords: Currency wars; Exchange rates; Global imbalances; International monetary system; Liquidity; Triffin dilemma (search for similar items in EconPapers)
JEL-codes: F32 F33 F36 F42 G15 (search for similar items in EconPapers)
Date: 2011-12
New Economics Papers: this item is included in nep-cba, nep-mon and nep-opm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Related works:
Chapter: The International Monetary System: Living with Asymmetry (2013)
Working Paper: The International Monetary System: Living with Asymmetry (2011)
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