European Central Bank Sees Global ‘Tri-Polar’ Currency System Evolving
European Central Bank council member Ewald Nowotny said a “tri-polar” global currency system is developing between Asia, Europe and the U.S. and that he’s skeptical the U.S. dollar’s centrality can be revived.
“What I see is a system where we have more centers of gravity” Nowotny said today in an interview with Austrian state broadcaster ORF-TV. “I see for the future a tri-polar development, and I don’t think that there will be fixed exchange rates between these poles.”
The leaders of the U.S., France and the European Commission will ask other world leaders to join in a series of summits on the global financial crisis beginning in the U.S. soon after the Nov. 4 presidential election, President George W. Bush, French President Nicolas Sarkozy and European Commission President Jose Barroso said in a joint statement yesterday.
Nowotny said he was “skeptical” when asked whether the Bretton Woods System of monetary policy, set up after World War II and revised in 1971, could be revived to aid global currency stability.
European leaders have pressed to convene an emergency meeting of the world’s richest nations, known as the Group of Eight, joined by others such as India and China, to overhaul the world’s financial regulatory systems. The meetings are to include developed economies as well as developing nations.
Sarkozy wants the G8 to consider re-anchoring their currencies, the hallmark of the 1944 Bretton Woods agreement that also gave birth to the International Monetary Fund and World Bank.
The current financial crisis, in which European governments have pledged at least 1.3 trillion euros ($1.7 trillion) to guarantee loans and take stakes in lenders, should be `”under control” by mid-2009, Nowotny said. The economy will suffer longer.
“Europe wants to present a blueprint for a new worldwide currency system.”
Reuters: Global summit should look at currencies
“How many should there be? What should the agreement between these great currencies be? Should we organize a discussion?”