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Predict Trends for the International Monetary Fund

In: Business and Management

Submitted By nestortron
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Predict Trends For The International Monetary Fund

Global prosperity, as we know it, has resulted from the rapid integration of global trade and capital flows springing from the inter-linkage of diverse economies worldwide. However, the evolution of the world economy has occurred so rapidly that it has outpaced its regulators (Schwab, 2012). The International Monetary System, in accordance with its mayor international currencies, has been faced with a myriad of challenges.
In this era of free global trade, the present dollar-based system is being forced to change (Schwab, 2012). With much speculation and evolving ideals, the most plausible solution has been the multipolar currency system based on the euro, dollar, and RMB (Schwab, 2012). In order to ensure a crisis-proof economic system, however, some economists believe this tripolar system must be backed by a Central Bank, an improvement in monetary regulations, and perhaps an induction of gold as a hedge and safe-haven asset.
Introducing a World Central Bank within a three-currency monetary union: would this lead to greater stabilization and coordination of Macroeconomic Policies among countries?
Some countries such as Germany have expressed interest in researching new alternatives to the existing rate regime, considering that neither of the two poles (fixed or flexible) are completely appropriate (Belke, Bernoth and Fichtner, 2011). According to Belke et al, the best and most suitable system would be one with only a few big currency areas, interconnected to each other by flexible exchange rates (Belke, Bernoth and Fichtner, 2011). Furthermore, the best “multi-polar key currency system”should be compelled by: the US Dollar, the Euro and the Chinese Renmimbi (Belke, Bernoth and Fichtner, 2011). These regimes, however, must be accompanied by an improved…...

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