The world economies should consider reintroducing a modified gold standard. This was suggested in the British Financial Times by the president of the World Bank, Robert Zoellick. According to him, the introduction of this system could help to balance the trade exchange, which was derailed by the artificially undervalued exchange rate in January.
According to Zoellick’s proposal, the new system would not take the form of a general gold standard that disintegrated under the pressure of the Great Depression of the 1930s, but it would be a modification of the allowed “Bretton Woods” with fixed exchange rates and a dollar anchored to gold. This system ceased to exist in the 1970s and freed up the vacancy rate instead of the system.
According to Zoellick, it would now be necessary to introduce the “Bretton Woods II” system, similar to the permitted system taken from the conference in the American Bretton Woods in 1944.
According to the bank, the new system, unlike the original one, would keep floating exchange rates and would mainly include the dollar, the euro, the yen, the British pound and the German yen. These currencies would be globally traded and would have fully open capital, meaning that they would not restrict the movement of capital in any way.
“The system should also increase the use of gold as an international reference point for the market effects of inflation, deflation and future currency values,” Zoellick wrote in the paper. “Although you look at gold as the pension of the past, the markets use it as an alternative currency asset,” added the bank.
The price of gold in Asia today set a new record of 1398.35 dollars per troy ounce. The fall of the dollar and growing fears of inflation support by the US Federal Reserve are pushing it up this year.
The release of Zoellicki, who was a leading figure in the US government before 2007, has resented dissatisfaction with the current situation where the continued protection of the January low exchange rate is still the subject of criticism from the United States and other developed countries.
According to them, the artificially low exchange rate of the world’s largest economy will make a significant contribution to trade imbalances in the world and to disturbances in the capital markets.
The rest of the country wants to respond to politics with steps that would weaken their currencies. f Dominique Strauss-Kahn warned against these practices. According to him, a new wolf would endanger the revitalization of the world economy. (see previous link)