Rethinking Bretton Woods | Mon, Nov 29, 2010
The Biennial Conference of the American Society for International Law- International Economic Law Interest Group was held November 18-20, 2010, at the University of Minnesota. The theme of the conference was "International Economic Law in a Time of Change: Reassessing Legal Theory, Doctrine, Methodology and Policy Prescriptions."
At this conference, RBW Project Director Aldo Caliari presented a paper titled "Updating the International Monetary System to Respond to Current Global Challenges: Can It Happen Within the Existing Legal Framework?"
The conference was hosted by ASIL International Economic Law Interest Group in co-sponsorship with ASIL-Midwest, University of Minnesota Law School, Minnesota Journal of International Law, Cambridge University Press, and Oxford University Press.
The paper argues that global economic crisis 2008-09 triggered the most intense debate about the international monetary system that the world has seen in the last four decades, with international policy-makers from both developed and developing countries and intergovernmental organizations proposing reforms.
Some of the necessary reforms can be introduced without significant revisions to the IMF Articles of Agreement. But the principles and provisions surrounding the roles of the US dollar and the Special Drawing Rights (SDRs) in the global reserve system envisioned in the 1960s may prove too limited a framework to allow for reforms that can adequately respond to current and acute challenges.
In this regard, it is argued that reforms of the international monetary system at this time would face four current and acute challenges that they should be able to address. A first challenge is to foster an orderly exit from the global imbalances. A second challenge is to reduce currency volatility, with its consequent negative implications for trade flows. The third challenge is to achieve mechanism for more symmetric adjustments between surplus and deficit countries, while avoiding recessionary impacts. Finally, as development and climate finance needs grow, the potential of the Special Drawing Rights to provide development finance in a reform of the system a system may no longer be an item that can be sidelined from the debate.
In making an assessment of reform proposals from the standpoint of the four challenges mentioned above, the paper outlines several areas where changes to the existing legal framework may be required.
Click here to download paper (version presented at the conference).