World Bank President Robert Zoellick said recently that, in order to more stable exchange rate and balance, major economies should consider re-take the improved global gold standard. Zoellick believes that national implementation of the “Bretton Woods Ⅱ” floating exchange rate mechanism, needed a “successor.”

This is a very interesting proposal. Like a year ago, the Chinese central bank Governor Zhou Xiaochuan made the same claim over the sovereignty reserve currency, Zoellick’s comments, will also rise to international concern and controversy. However, in view of the gold standard in the history of the use and finally disappeared in the course of history, Zoellick look forward to return the gold standard, even if put on the cloak of improvement, it is bound to be more idealistic than realistic.

Obviously, this week will be held in Seoul, the Group of 20 (G20) summit, the exchange rate remains an important topic. In this summit, Zoellick thrown improved version of the gold standard, its real meaning is not the reconstruction of the existing international monetary system, more a reflection of the World Bank on the current international financial system concerns.

Is repeated a current international hot spots often occur, that is, some other countries accuse the United States and China as undervalued yuan continued to intervene in currency markets, causing global current account imbalances and the resulting capital market distortions. In fact, it has become clear that the voice of those accused have been given too many political factors. Of course, China must also be responsible for themselves and their attitudes to global, adhere to the reform on its own road.

Often than the entanglement of the RMB exchange rate issue, the dollar’s problems are more prominent and serious. As a major international reserve currency, the U.S. domestic monetary policy objectives and the requirements of the reserve currency countries is often a contradiction. Interested in the rapid depreciation of the dollar, is increasing by the international community attention and criticism. For example, the German Finance Minister Schaeuble recently the second round against the United States sharply criticized proposed quantitative easing policy, “the United States accused China of manipulating its exchange rate on the one hand, on the one hand but with artificially low dollar printing press, this approach is very appropriate . ”

Now the question is, this world is not possible to restore the gold standard. Of course, people are more concerned about the future of the international monetary system reform and how to where to go. Of gold as the currency of the monetary system had prevailed since the mid-19th century, maintained a hundred years time. “A war” after the gold standard because the necessary conditions to maintain the gradual destruction of the international monetary system to ensure the stability of lost, when the country ceased to honor and prohibited the export of bank notes, gold standard gradually collapsed. Because of limited growth in gold production, gold coins in circulation is weak, while the stock of gold in the uneven distribution of the countries – the objective existence of many problems, so the view is almost restored the gold standard is a kind of “nostalgia and Nostalgia. ”

40’s of last century, the British economist John Maynard Keynes had proposed using 30 representative based on the value of goods as an international currency unit “Bancor” idea, but failed to implement this vision. Later, the White-based program also eventually to the collapse of the Bretton Woods system. The current pattern of international monetary relations, relying mainly Jamaican currency agreements. The international monetary system, dollar as the central fact is that the diversification of international reserves and the monetary system of floating exchange rates.

It has long recognized that the current international monetary system, there are also profound, but to solve this problem, there is no perfect answer. Governor Zhou Xiaochuan reserve currency over the recommendation of sovereignty, at the theoretical level to explore the reform of the international monetary system provides a very good version, and established an ideal target. Super sovereign reserve currency sovereign credit not only overcame the inherent currency risk, but also for global liquidity possible. However, in practical level, this proposal is still considered the lack of real operational.

In other words, create a new international reserve currency will take a long time. Can not go beyond the existing international monetary system conditions of the times, not overnight, the international is still only in the fog continued to walk through. However, the difficulties facing the international monetary system, the international community should give more consideration to how to face the reality of conditions in U.S. dollar-dominated international monetary system based on realistic goals for the road, towards promoting the stability of the currency of international reserve currency, the supply order, direction adjustable sound volume, rather than to tangle in Triffin dilemma can not extricate themselves.

If we say that President Zoellick restore the gold standard of the proposed improvement is to throw a piece of “brick”, then the next, leads to the “Jade” is to continue to reform the international financial system around the start. This requires that we must strengthen the international financial system dominated the country’s international responsibility of developing countries in expanding the role of the international financial system, increase in emerging market countries and developing countries in international financial institutions, the voice and representation . Only the gradual improvement of the international monetary system, reform the international financial organizations to strengthen international financial regulation, to encourage regional financial cooperation in order to truly improve the stability of the international financial system.

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