Monitoring the International Monetary System: Its Development in the West, and Future in the East

Todd J. Barry ()

Academic Journal of Economic Studies, 2016, vol. 2, issue 2, 114-133

Abstract: The “gold standard” is frequently mentioned in text books, but few without an economics background can fully understand it. This paper thus begins in 1896, when U.S. Presidential candidate William Jennings Bryan declared, “You shall not crucify mankind on a cross of gold.” Since going back to the middle ages, the world has had numerous monetary systems, which are here explained in comprehensible terms. A modern reoccurring idea is to return to some form of the gold standard, while some argue for switching to the Chinese yuan or another international reserve currency, which the International Monetary Fund (IMF) will adopt in their Special Drawing Rights starting in October, 2016. This paper is normative in that it comments on the current international structure, but uses economic principles to support its argument in favor of an internationally strong dollar. It thus traces the history of a topically contentious subject, with a basic regression indicating important predictive factors for the future. It offers that a new gold standard would not be in the world’s interest, interfering with monetary policy, while emerging market countries would be best to import more and financially deepen, which the regression shows was why the Chinese yuan was adopted by the IMF, then looking ahead to other parts of Asia and towards bitcoins.

Keywords: Gold standard; International Monetary System; reserve currency; special drawing rights; Chinese yuan (search for similar items in EconPapers)
JEL-codes: A20 F02 F33 N10 (search for similar items in EconPapers)
Date: 2016
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Persistent link: https://EconPapers.repec.org/RePEc:khe:scajes:v:2:y:2016:i:2:p:114-133

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