More pluralism, more stability?

Presentation by Mr Claudio Borio, Head of the Monetary and Economic Department of the BIS, at the Seventh high-level SNB-IMF conference on the international monetary system, Zurich, 10 May 2016.

BIS speech  | 
10 May 2016
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 |  18 pages

Abstract

Would a more pluralistic international monetary system - one with more international currencies on a more equal footing - enhance global monetary, financial and macroeconomic stability? There is no doubt that the dominance of one currency creates challenges for the international monetary and financial system (IMFS), since the domestic interests of the issuing country need not coincide with those of the system as a whole. But it is less clear whether a more pluralist approach could help address the system's main weakness or "excess (financial) elasticity" - that is, its inability to prevent the build-up and unwinding of hugely damaging financial imbalances, or outsize financial cycles, thereby amplifying weaknesses in national arrangements. Addressing this weakness would require stronger anchors at national and international level. Some progress has been made, especially at national level, but much more needs to be done.