The next head of the International Monetary Fund must be capable of helping to create a new global framework, for the existing U.S.-led order has had its day, Jeffrey Sachs, who heads the Earth Institute at Columbia University, wrote in the Financial Times.
For the past 20 years, the U.S. has been unable to provide monetary stability, financial regulation and fiscal rectitude; if the dollar remains the only key currency, the world will go on suffering the consequences of America’s troubles, as happened during the financial crisis, Sachs said.
The answer is a system based on several regional currencies: the dollar, the euro, the yuan and, perhaps, the Brazilian real and the Indian rupee; that means regional groups such as the eurozone, the Arab world and the main economies of southeast Asia must assume responsibility for monetary policy, financial regulation, tax coordination and enforcement and fiscal policy harmonization, he said.
The IMF would still have plenty to do, for the world is “rife with lawlessness and recklessness, with tax havens and regulation-free zones catering to the avarice of globally mobile capital,” Sachs said.
A new IMF leader should not be “anointed” but selected on the basis of careful vetting, he said.
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