Reforming the international payments system

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Chapter 31 in All Fall Down, 2018, pp 200-216 from Edward Elgar Publishing

Abstract: The most critical flaw in the current international monetary system is the means of payment. Using John Maynard Keynes’ concept of an international clearing union, this chapter proposes the creation of a public international clearing agency that would hold the international reserves of countries, debit and credit their accounts through interactions with their national central banks, and allow all countries to make international payments in their own currencies. Member country reserves would be backed by their government securities and, with permission of the majority of its members, the new agency would be able to buy or sell those securities to augment or reduce a country’s reserves. This would allow the clearing agency, unlike the International Monetary Fund, to engage in countercyclical strategies that would influence global liquidity and introduce an effective lender of last resort at the international level.

Keywords: Economics and Finance; Politics and Public Policy (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (3)

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