Anchoring the Global Financial System

Gold once anchored the global financial system and, from the late nineteenth century, the extensive cross-national flow of finance, trade and investment was facilitated by its virtually unassailed role as the global monetary unit. At the end of the twentieth century, there was also a surge in international flows of finance, trade and investment, but without the facilitation of gold, or any other globally recognised single monetary unit. We may identify the role of the US dollar as hegemonic, but it has no formal status, and exchange rates in relation to the US dollar have been anything but stable. So the current era of ‘globalisation’ is occurring, it seems, without a formal, universally recognised monetary anchor. But does that mean it is occurring without any sort of anchor at all?