G20 summit in Seoul soon, the exchange rate, financial reform, trade and development issues are the focus of the summit. China Securities Journal that the current depreciation of the dollar, awash with liquidity, the currency of war disguised as clusters of, the “liquidation of dollar” urgent reform of the international monetary system.

30 years ago, in the decoupling of the dollar and gold, the U.S. has been complacent when he was Treasury Secretary Connally said, “the dollar is our currency, your problem.” Today, the United States in the international monetary system through the hegemony risk to the global output, the U.S. dollar as the negative effects of major international currencies become more serious. From the “currency war” to quantitative easing, the Fed printing money to “the nationalization of private debt”, then “national debt internationalization”, trying to output through devaluation and inflation to erode the debt, deal with excessive debt accumulation of national economy problem.

Dollar hegemony to bring other countries in the world is “unbearable weight” and its inherent flaws magnified the risk of global economic cyclical imbalances. Sovereignty of the weak dollar increases the pressure on the currency’s appreciation, competitive exchange rate intervention frequency of excess liquidity into emerging markets, dollar-denominated international commodity price inflation, countries were forced to “import” inflation. Meanwhile, the dollar reserves of countries mainly U.S. dollar foreign exchange assets and claims will be seriously diminished.

The current international monetary system is the institutional defects, particularly in the monopoly to issue currency. In this system, the core of the U.S. dollar as the currency, the issue of broken free from the constraints of gold reserves, there is no legal restrictions on the circulation, based entirely on credit. The use of money in the world, the U.S. distribution rights are held by the hands. The United States by virtue of the international monetary system “central country” status, and gradually establish a financial hegemony.

However, the dollar hegemony, the more unscrupulous, more nearly from its dead end. G20 summit in Seoul is not open, the media to judge the United States will inevitably have to be punitive, and may even form a “G19 on 1” embarrassing situation. Indeed, since the international financial crisis, a new international monetary system of the sound heard, a variety of initiatives can be described as benevolent see benevolence and the wise see wisdom.

First, the program return to the gold standard. World Bank President Robert Zoellick proposed that consideration should be given back to the improved global gold standard for the exchange rate to provide guidance, through a combination of U.S. dollar, euro, British pound, Japanese yen and the yuan and other currencies, a number of currencies pegged to gold recovery. However, the gold supply can meet the rapid growth of the global economy, the new gold standard would lead to “Triffin problems” to reproduce, are unknown.

Option II is to create supra-national sovereignty of a reserve currency. China’s central bank governor Zhou Xiaochuan last year initiative, the International Monetary Fund’s Special Drawing Rights (SDR) development of supra-national sovereignty of a reserve currency, and gradually replace the existing reserve currency the U.S. dollar. But in the global monetary system dominated by the pattern of a few countries, create super-sovereignty reserve currency system is extremely difficult.

Option III is the establishment of regional currencies to the dollar to compete. The idea that Asian monetary union should be established by the euro, Asian currencies and the dollar-yuan, and compete against one U.S. dollar dominance. But now for the Asian dollar is still in the conceptual stage to discuss, there can be no real progress, let alone the challenges of the existing international monetary system and shake.

Taken together, these initiatives are fundamental to maintaining the ecological diversity of financial and currency, and take appropriate way to adjust the shackles of dollar hegemony, weaken the dollar, “the world’s leading currency” status.

Of course, the reform of the international monetary system is the inevitable choice, but also a long, slow and tortuous process. Give up the dollar and the pound through the race, after two world wars to establish hegemony even more difficult.

The formation of the international monetary system and the transfer of ownership is the world’s economic development, comprehensive national contest between countries results. The current global economic integration has reached a “you have me, I have you” stage, the monetary system reform must confront the forces, game, understanding, consensus-building process, the use of multilateral and balanced framework for reconstruction of G20 is more fair sound monetary system, to follow the pattern of changes in the world economy inevitable choice.

For China, the international monetary system reform and take full advantage of the opportunity to promote the internationalization of RMB and the interest rate reform, institutional innovation to accelerate the integration into the international monetary system to increase the voice of developing countries, it is a golden opportunity.

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