Global Financial Rules

Accordingly with Lorenzo Bini Smaghi:

"[…] if financing were to become easier, it would be unclear how both creditors and debtors would perceive the risk of excessive imbalances. The real danger is that adjustment would take place even later, with imbalances left to accumulate for a longer period of time. Under these circumstances, crises could be even greater, and the adjustments harsher – as occurred under the last world currency, the gold standard."

"A viable international financial system requires a mechanism to keep imbalances in check. An essential element of such a mechanism is to give the IMF a prominent role in two areas: strong and effective surveillance in order to prevent crises, and responsible lending to countries in need, but with appropriate limits and conditionality."

"We don’t need to reinvent the wheel; we just need to follow up on the commitments made ten years ago. Dealing with the short-run challenges of the current crisis should not distract us from the objective of preventing future meltdowns."

For the moment, the patient is stable

Barry Eichengreen señala que es complicado poder determinar el valor tipo de cambio en el corto plazo (vs. euro o vs. yen o vs. renminbi o vs. una canasta de divisas), el mismo se equivoco en "Why Now is a Good Time to Sell the Dollar". Señala que la volatilidad del dólar en los últimos meses se origina por la re-configuración del apetito al riesgo global. Sin embargo dos factores estructurales deben de considerarse como claves:

The one thing that could precipitate the demise of the dollar would be reckless economic mismanagement in the US. One popular scenario is chronic inflation. But this is implausible. Once the episode of zero interest rates ends, the US Federal Reserve will be anxious to reassert its commitment to price stability. There may be a temptation to inflate away debt held by foreigners, but the fact is that the majority of US debt is held by Americans, who would constitute a strong constituency opposing the policy.

The other scenario is that US budget deficits continue to run out of control. Predictions of outright default are far-fetched. But high debts will mean high taxes. The combination of loose fiscal policy and tight monetary policy will mean high interest rates, sluggish investment, and slow growth. Foreigners – and residents – might well grow disenchanted with the currency of an economy with these characteristics.