Replacing the failed Washington consensus

Abstract

Concern about unsustainable payments imbalances in the global economy has prompted renewed interest in international monetary reform. This paper describes and evaluates six reform proposals that focus on strengthening the institutional framework for the current system. Some of these proposals advocate increased surveillance; others would create new instruments or facilities; still others propose an evolutionary path toward a new, nonnational reserve or transactions currency. But none of the proposals confront the problems posed by the changes that resulted from the privatization of the international monetary system after the collapse of the gold/dollar exchange standard. The paper argues that a new institutional structure is needed to promote stability and balance by rebuilding a channel for balance-of-payments settlements managed by authorities that represent public rather than private interests.

Keywords:

• international monetary system
• international payments imbalances
• international reserve assets
• Washington Consensus