Reforming the International Monetary System

As we have seen in Chapter 9 and as widely recognized by economists all over the world, ‘[t]he international monetary and financial systems are clearly in trouble, and reforms are called for’ (Dooley et al. 2009: 4). This call for reforms of the international monetary regime is far from new. Before and after the Bretton Woods conference, where the discussion centred on Keynes’s and White’s proposals, several plans of reform were proposed and debated, among these Schumacher’s (1943a, 1943b) and Stamp’s (1963). With the partial exception of White’s plan, which de facto merely enabled the passage from the sterling exchange standard to the US dollar exchange standard, none of these plans was retained and the world went on using what was to be universally labelled a non-system of international payments. The need for a reform capable of eradicating the international causes of monetary instability and financial crises has grown stronger year after year and has now reached a critical urgency. However, as Dooley et al. (2009: 4) emphasized, ‘in weighing potential dimensions of reform, there remains considerable uncertainty and debate about the relative importance of factors that have driven and continue to drive the current crisis’. Indeed, unless the origin of international monetary disorder is correctly individuated, no successful plan of reform can be envisaged. Now, quantum monetary macroeconomics provides a new analysis of monetary and financial disorders, and is equal to the task of suggesting a solution that can take three alternative forms: a reform concerning any single country, a reform concerning a group or a community of countries, such as the EU, and a reform of the entire system of international payments.