2010 Articles

Towards A New Global Reserve System

Stiglitz, Joseph E.; Greenwald, Bruce C.

The world‘s financial system has been marked by a high level of instability in recent decades. The view of free-market fundamentalists that a movement to free and fully flexible exchange rates accompanied by financial and capital market liberalization would automatically be accompanied by the development of good markets for managing risk and a new era of true stability and high growth (as the episodic adjustments of exchange rates under the old regime came to an end) has been proven wrong. Stiglitz and Greenwald argue that the implementation of a new global reserve system is therefore essential if the global economy is to be restored to sustained prosperity and stability, and outline several approaches to this goal.