{"id":3318,"date":"2021-08-30T12:00:26","date_gmt":"2021-08-30T10:00:26","guid":{"rendered":"http:\/\/www.obsfin.ch\/?page_id=3318"},"modified":"2021-08-30T12:06:20","modified_gmt":"2021-08-30T10:06:20","slug":"virustovitamin-n19","status":"publish","type":"page","link":"https:\/\/www.obsfin.ch\/fr\/virustovitamin-n19\/","title":{"rendered":"OF Discussion Board n\u00b019 \u2013 27 August 2021"},"content":{"rendered":"<h2><strong>OF Discussion Board n\u00b019 &#8211; 27 August 2021<br \/>\n<\/strong><\/h2>\n<h3><strong data-wp-editing=\"1\"><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-3313 size-medium\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2021\/08\/bretton-woods-400-300x183.png\" alt=\"\" width=\"300\" height=\"183\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2021\/08\/bretton-woods-400-300x183.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2021\/08\/bretton-woods-400-2x1.png 2w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2021\/08\/bretton-woods-400.png 655w\" sizes=\"auto, (max-width: 300px) 100vw, 300px\" \/>Question asked : <span style=\"color: #ff0000;\">\u00ab\u00a0<\/span><\/strong><span style=\"color: #ff0000;\"><strong>Half a century ago, on Sunday evening of 15h August 1971, president Nixon, \u00ab\u00a0fighting the currency speculators\u00a0\u00bb, has \u00ab\u00a0suspended\u00a0\u00bb the convertibility of the USD into gold (Nixon speech is available here\u00a0<a style=\"color: #ff0000;\" href=\"https:\/\/www.youtube.com\/watch?v=ye4uRvkAPhA\">https:\/\/www.youtube.com\/watch?v=ye4uRvkAPhA<\/a>). The 1971 decision has opened a new &#8211; still unfinished &#8211; chapter in world economic, monetary and financial history. Please share with us your thoughts &#8211; memories, lessons, dreams &#8211; related to this 50th anniversary. Are floating exchange rates the solution or are they the problem for the world of today?\u00a0\u00bb<\/strong><\/span><\/h3>\n<ul>\n<li><a href=\"#Editorial\">Editorial<\/a><\/li>\n<li><a href=\"#All-contribution\">All Contributions<\/a><span id=\"Link-contributions\"><\/span><span id=\"Link-contributions\"><\/span><\/li>\n<\/ul>\n<p>Thanks for those of our contributors who ventured to react to the this question posed in this Discussion Board.<\/p>\n<p><strong>Editorial &#8211; <span style=\"font-size: 14pt;\">From the gold window to the global casino<\/span><\/strong><br \/>\n<span id=\"Editorial\">by Virgile Perret &amp; Paul H. Dembinski<\/span><\/p>\n<table style=\"width: 100%; border-style: solid; border-color: #ffffff;\">\n<tbody>\n<tr>\n<td style=\"width: 74%; border-color: #ffffff; border-style: solid;\">\n<p style=\"text-align: justify;\">On 15 August 1971, US President Richard Nixon announced that the United States would no longer honour the commitment made at the Bretton Woods conference (1944) to redeem US dollars for gold at the rate of $35 per ounce. Unexpectedly for the players, this decision has changed the rules of the game and its consequences are still visible today.<br \/>\nMilton Friedman and other monetarists had argued that the end of fixed exchange rates would lead to greater stability and low inflation since the value of currencies would be determined by financial markets, imposing salutary discipline on governments. This reasoning did not take into account the effect that growing capital flows would have on exchange rates. As stressed by Etienne Perrot sj, the transfer of exchange risks from the states to economic actors created deleterious effects since \u201cthe incessant variations of exchange rates and interest rates have generated the creation of multiple financial instruments for hedging risk, with the perverse effects that we know concerning speculation.\u201d<br \/>\nThe suspension of dollar convertibility into gold also has had a major impact on emerging economies. Inflationary pressure intensified and the unexpected devaluation of the US currency harmed the interests of oil producers that decided to raise their prices. As explained by professor Oscar Ugarteche, \u201cthe high inflation rate of the 70\u2019s and the FED\u2019s anti-inflationary policies led to very high interest rates that strangled developing countries\u201d.<br \/>\nAlthough floating exchange rates created high financial volatility, economist John Francis Diaz still maintains that \u201cits benefits outweigh the problems\u201d. Along the same lines, professor C\u00e9dric Tille explains that \u201ca vast body of research has shown that a floating rate offers some policy autonomy, though less than we used to think. It works best when accompanied with other tools, such as macro-prudential policy and capital flow management.\u201d<br \/>\nFifty years later, the US dollar as single pillar of the global monetary system shows signs of strain, notably since the emergence of the euro. While we cannot return to the gold standard, some estimate that \u201cthe world needs a new Bretton Woods\u201d, possibly as suggested in 2019 by the governor of the Bank of England, Mark Carney, in the form of a global digital currency &#8211; backed by a network of central bank digital currencies \u2013 replacing the dollar.<\/p>\n<\/td>\n<td style=\"width: 26%; text-align: center; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Perret\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1912 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perret-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perret-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perret-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perret-1024x1024.png 1024w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perret-768x768.png 768w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perret-1536x1536.png 1536w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perret-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perret.png 1592w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Dembinski\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1903 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/PHD-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/PHD-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/PHD-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/PHD-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/PHD.png 552w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p><a href=\"http:\/\/www.obsfin.ch\/VirusToVitamin19\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft wp-image-2483 size-full\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/08\/Image-PDF.jpg\" alt=\"\" width=\"124\" height=\"90\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/08\/Image-PDF.jpg 124w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/08\/Image-PDF-1x1.jpg 1w\" sizes=\"auto, (max-width: 124px) 100vw, 124px\" \/><\/a><\/p>\n<p>&nbsp;<\/p>\n<table id=\"All-contribution\" style=\"width: 100%; border-style: solid; border-color: #ffffff;\">\n<tbody>\n<tr>\n<td style=\"width: 74.0321%; border-color: #ffffff; border-style: solid;\"><strong>\u00ab\u00a0<\/strong><strong>\u2026 humiliation because the hotel refused to change his USD travellers cheque \u2026 \u201d<\/strong><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #ff0000;\"><strong>On that day I was on a UN mission in Tonga. I came down to breakfast and found my US colleague fuming with rage and humiliation because the hotel had refused to change his USD travellers cheque.<\/strong><\/span> Tonga being 13 hours ahead of GMT (!), he must have been among the first of his compatriots to be thus confronted with the evident reality that in a market economy any good or service is simply worth what the market thinks it\u2019s worth. As a professor of economics supportive of the principles of the market economy, I was cock-a-hoop: they had scored a point in the form of floating exchange rates.<\/p>\n<p style=\"text-align: right;\"><strong>Edouard Dommen<\/strong><strong><br \/>\n<\/strong><span style=\"font-size: 10pt;\"><em>Specialist in economic ethics, former university professor and researcher in UNCTAD and president of Geneva\u2019s Ecumenical Workshop in Theology<\/em><\/span><\/p>\n<\/td>\n<td style=\"width: 25.7791%; text-align: center; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><strong><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Dommen\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1615 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dommen-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dommen-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dommen-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dommen-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dommen.png 606w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 74.0321%; border-color: #ffffff; border-style: solid;\"><strong>\u00ab\u00a0<\/strong><strong>\u2026 the exchange risks were transferred from the States to the economic actors \u2026 \u201d<\/strong><\/p>\n<p style=\"text-align: justify;\">At the beginning of 1971, our teacher of monetary economics announced all the expected benefits of floating exchange rates: elimination of foreign exchange reserves, reintroduction of American monetary policy into the common system, day-to-day adjustment of the effective commercial powers of the various nations. We quickly had to be disillusioned. The exchange risks were transferred from the States to the economic actors. To limit these deleterious variations for all economies, it was necessary to institute active monetary policies. <span style=\"color: #ff0000;\"><strong>Suddenly the incessant variations of exchange rates and interest rates have generated the creation of multiple financial instruments for hedging risk, with the perverse effects that we know concerning speculation. Suddenly, the monetary policies of the main currencies, mainly the dollar, then, to a lesser extent the yen and the yuan, became the problem of all the other nations.<\/strong><\/span><\/p>\n<p style=\"text-align: right;\"><strong>Etienne Perrot<br \/>\n<\/strong><span style=\"font-size: 10pt;\"><em>Jesuit, Dr. Economics sciences, editorial board of the magazine Choisir (Geneva), editorial adviser of the journal \u00c9tudes (Paris)<\/em><\/span><\/p>\n<\/td>\n<td style=\"width: 25.7791%; text-align: center; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><strong><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Perrot\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1980 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perrot-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perrot-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perrot-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perrot-1024x1024.png 1024w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perrot-768x768.png 768w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perrot-1536x1536.png 1536w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perrot-2048x2048.png 2048w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Perrot-1x1.png 1w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 74.0321%; border-color: #ffffff; border-style: solid;\"><strong>\u00ab\u00a0<\/strong><strong>\u2026 the whole system became a world financial casino \u2026\u201d<\/strong><\/p>\n<p style=\"text-align: justify;\">The end of convertibility in 1971 was not so much about \u201cfighting the currency speculators\u201d as about the fact that the US had been printing money far beyond Fort Knox gold reserves. Jean Jacques Servan-Schreiber made it clear at the time, with <em>The American Challenge<\/em>. \u00a0De Gaulle complained \u201cnous les payons pour qu\u2019ils nous ach\u00e8tent.\u201d\u00a0And the US continues printing money, a world privilege. <span style=\"color: #ff0000;\"><strong>With the end of the Glass-Steagall regulation of banking in 1999, and the substitution of government-printed money with bank-emitted digital money through credit, the whole system became a world financial casino. Debt is exploding, over 100% of world GDP. Poor countries are being squeezed out. The world needs a new Bretton Woods, not economic war.\u00a0<\/strong><\/span><\/p>\n<p style=\"text-align: right;\"><strong>Ladislau Dowbor<br \/>\n<\/strong><span style=\"font-size: 10pt;\"><em>Economist, professor at the Catholic University of S\u00e3o Paulo, consultant to a number of international agencies<\/em><\/span><\/p>\n<\/td>\n<td style=\"width: 25.7791%; text-align: center; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><strong><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Dowbor\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1631 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dowbor-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dowbor-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dowbor-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dowbor-1024x1024.png 1024w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dowbor-768x768.png 768w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dowbor-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Dowbor.png 1406w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/strong><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 74.0321%; border-color: #ffffff; border-style: solid;\"><strong>\u00ab\u00a0<\/strong><strong>\u2026 floating rate offers some policy autonomy, though less than we used to think \u2026\u201d<\/strong><\/p>\n<p style=\"text-align: justify;\">A floating exchange rate is A solution, but not THE solution. Then again, no single element of a policy framework is THE solution. <span style=\"color: #ff0000;\"><strong>A vast body of research has shown that a floating rate offers some policy autonomy, though less than we used to think. It works best when accompanied with other tools, such as macroprudential policy and capital flow management, and research has led to substantial progress in our understanding of how to use them.<\/strong><\/span> Anchoring policy to another country through a fixed exchange rate can make sense, but only as part of a broader political project or if the odds of developing solid domestic policy institutions are too limited.<\/p>\n<p style=\"text-align: right;\"><strong>C\u00e9dric Tille<br \/>\n<\/strong><span style=\"font-size: 10pt;\"><em>Professor of macroeconomics at the Graduate Institute of International and Development Studies in Geneva<\/em><\/span><\/p>\n<\/td>\n<td style=\"width: 25.7791%; text-align: center; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Tille\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-2001 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Tille-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Tille-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Tille-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Tille-1024x1024.png 1024w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Tille-768x768.png 768w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Tille-1536x1536.png 1536w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Tille-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Tille.png 1842w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 74.0321%; border-color: #ffffff; border-style: solid;\"><strong>\u00ab\u00a0<\/strong><strong>\u2026 floating exchange rates are more of a solution than a problem \u2026\u201d<\/strong><\/p>\n<p style=\"text-align: justify;\">I believe floating exchange rates are more of a solution than a problem. Under a fixed exchange rate, central banks frequently must intervene in foreign exchange markets to protect the gold parity that\u2019s why periods of fixed exchange rates were frequently characterized by currency crises. During those periods, <span style=\"color: #ff0000;\"><strong>too much pressure was put on central banks to devalue or revalue the country\u2019s currency. Problems are worse when country\u2019s attempt to devalue a currency by giving out too much of it that normally ended up economies running out of the currency.Floating exchange rates have a disadvantage creating higher market volatility, but its benefits outweigh the problems.<\/strong><\/span><\/p>\n<p style=\"text-align: right;\"><strong>John Francis Diaz<br \/>\n<\/strong><span style=\"font-size: 10pt;\"><em>Associate Professor of Finance at Chung Yuan Christian University, Taiwan<\/em><\/span><strong><br \/>\n<\/strong><\/p>\n<\/td>\n<td style=\"width: 25.7791%; text-align: center; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Diaz\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-2322 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/06\/Diaz-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/06\/Diaz-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/06\/Diaz-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/06\/Diaz-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/06\/Diaz.png 693w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 74.0321%; border-color: #ffffff; border-style: solid;\"><strong>\u00ab\u00a0<\/strong><strong>\u2026 the countries of the Euro chose to surpass fixed exchange rates \u2026\u201d<\/strong><\/p>\n<p style=\"text-align: justify;\">As Zhou Enlai on the French Revolution:\u00a0 it\u2019s \u201ctoo early to say\u201d whether floating exchange rates are a solution, a problem, or parts of both. After abandoning the Dollar Standard, large countries had several agreements and disagreements, while some smaller countries experienced with fixed exchange rates. <span style=\"color: #ff0000;\"><strong>There are probably more advantages with flexibility, but in the meantime the countries of the Euro chose to surpass fixed exchange rates and adventure into unknown territory with a common currency\u2026 Seen from the point of view of a comparatively weak party of the group like Spain, the gains of monetary stability within the Euro largely make up for possible drawbacks. Whether lessons can be drawn for other regions is open for discussion.<\/strong><\/span><\/p>\n<p style=\"text-align: right;\"><strong>Domingo Sugranyes<br \/>\n<\/strong><span style=\"font-size: 10pt;\"><em>Director of a seminar on ethics and technology at Pablo VI Foundation, past Executive Vice-Chairman of MAPFRE international insurance group<\/em><strong><br \/>\n<\/strong><\/span><\/p>\n<\/td>\n<td style=\"width: 25.7791%; text-align: center; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Sugranyes\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1605 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sugranyes-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sugranyes-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sugranyes-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sugranyes-1024x1024.png 1024w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sugranyes-768x768.png 768w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sugranyes-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sugranyes.png 1296w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 74.0321%; border-color: #ffffff; border-style: solid;\"><strong>\u00ab\u00a0<\/strong><strong>\u2026 high interest rates that strangled developing countries \u2026 \u201d<\/strong><\/p>\n<p style=\"text-align: justify;\">I was working that day in Southampton New York, when the radio announced the demise of the gold dollar standard. What would happen was uncertain. <span style=\"color: #ff0000;\"><strong>Nobody expected a major depreciation of the dollar, with a sharp revaluation of the European currencies and a sharp jump in oil prices.<\/strong><\/span> The creation of the ECU the following year was also news as European countries decided to use their own currencies to trade amongst themselves. <span style=\"color: #ff0000;\"><strong>The high inflation rate of the 70\u2019s and the FED\u2019s anti-inflationary policies led to very high interest rates that strangled developing countries.<\/strong><\/span> Worse as there is a confirmed inverse relationship between interest rates and commodity prices leading the emerging markets into a growth terrain, dependent on the FED.<\/p>\n<p style=\"text-align: right;\"><strong>Oscar Ugarteche<br \/>\n<\/strong><em><span style=\"font-size: 10pt;\">Visiting professor of Economics in various universities<\/span><br \/>\n<\/em><\/p>\n<\/td>\n<td style=\"width: 25.7791%; text-align: center; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Ugartech\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-2219 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/05\/Ugarteche-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/05\/Ugarteche-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/05\/Ugarteche-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/05\/Ugarteche.png 297w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 74.0321%; border-color: #ffffff; border-style: solid;\"><strong>\u00ab\u00a0<\/strong><strong>\u2026\u00a0we cannot return to the gold standard \u2026 \u201d<\/strong><\/p>\n<p style=\"text-align: justify;\">I have no memory of that fateful August day in 1971, being in Malaysia, and busy with homework and merry friendships. (We derided Nixon as the US President perpetuating the Vietnam war.) Still, Nixon\u2019s decision to float exchange rates has seemingly, over the last 50 years, contributed to extraordinary economic growth, financial market volatility, and exalted central bank power. <span style=\"color: #ff0000;\"><strong>Despite talk of a link between inflation (not a problem for decades) and floating exchange rates, we cannot return to the gold standard. There isn\u2019t enough gold, nor do we want to excavate and melt the metal in light of net-zero climate goals. If stepping back in time doesn\u2019t provide solutions, perhaps we should consider a hybrid monetary future consisting of fiat currencies and cryptocurrencies.<\/strong><\/span><\/p>\n<p style=\"text-align: right;\"><strong>Kara Tan Bhala<br \/>\n<\/strong><span style=\"font-size: 10pt;\"><em>President and Founder of Seven Pillars Institute for Global Finance and Ethics<\/em><\/span><\/p>\n<\/td>\n<td style=\"width: 25.7791%; text-align: center; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#TanBhala\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-2598 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/09\/Tan-Bhala-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/09\/Tan-Bhala-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/09\/Tan-Bhala-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/09\/Tan-Bhala-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/09\/Tan-Bhala.png 355w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 74.0321%; border-color: #ffffff; border-style: solid;\"><strong>\u00ab\u00a0<\/strong><strong>\u2026 policy guidelines rather than the new systemic blueprint \u2026 \u201d<\/strong><\/p>\n<p style=\"text-align: justify;\">The suspension of the convertibility of the USD into gold was followed by several countries\u2019 abandonment of their commitments to exchange-rate parities for their currencies and in December 1971 by an agreement on realignment of the currencies of member countries of the Group of Ten. This realignment failed to end pressures on the USD, and in March 1973 the central banks of countries of the Group of Ten and the European Economic Community abandoned their commitment to intervene in exchange markets to maintain stable exchange rates with the USD, thus ending the Bretton Woods par-value system. <span style=\"color: #ff0000;\"><strong>Negotiations had started as early as July 1972 but produced policy guidelines rather than the new systemic blueprint hoped for by some. Henceforth international policymaking regarding exchange rates and monetary movements became more politicised with outcomes resembling truces rather than longer-term settlements.<\/strong><\/span><\/p>\n<p style=\"text-align: right;\"><strong>Andrew Cornford<br \/>\n<\/strong><span style=\"font-size: 10pt;\"><em>Counsellor, Observatoire de la Finance; past staff member of UNCTAD, with special responsibility for financial regulation and international trade in financial services<\/em><\/span><\/p>\n<\/td>\n<td style=\"width: 25.7791%; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Cornford\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1916 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Corrnford-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Corrnford-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Corrnford-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Corrnford-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Corrnford.png 412w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 74.0321%; border-color: #ffffff; border-style: solid;\"><strong>\u00ab\u00a0<\/strong><strong>\u2026 the unsustainable value of the dollar became increasingly apparent \u2026\u201d<\/strong><\/p>\n<p style=\"text-align: justify;\">From 1969 onward, until Nixon&rsquo;s announcement of suspension of gold convertibility on 15 August 1971, <span style=\"color: #ff0000;\"><strong>the unsustainable value of the dollar became increasingly apparent, while the anxiety only became intense in 1971 after interest rates had come down in the 1970 recession. <\/strong><\/span>Nixon\u2019s administration suspended gold convertibility of the dollar. In the early 1970s, Nixon\u2019s government took a tough course on the collective management of dollar-based monetary systems. The instant focus was on an exchange rate rearrangement, which was the objective of Nixon&rsquo;s closing of the gold pane and transitory import surcharge. During the 1990s till date, international financial regulatory issues have insisted upon increasing multilateral attention.<\/p>\n<p style=\"text-align: right;\"><strong>Archana Sinha<br \/>\n<\/strong><span style=\"font-size: 10pt;\">Head, Department of Women\u2019s Studies, Indian Social Institute, New Delhi, India<\/span><\/p>\n<\/td>\n<td style=\"width: 25.7791%; vertical-align: middle; border-color: #ffffff; border-style: solid;\"><strong><a href=\"http:\/\/www.obsfin.ch\/from-virus-to-vitamin\/contributors\/#Sinha\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter wp-image-1993 size-thumbnail\" src=\"http:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sinha-150x150.png\" alt=\"\" width=\"150\" height=\"150\" srcset=\"https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sinha-150x150.png 150w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sinha-300x300.png 300w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sinha-1x1.png 1w, https:\/\/www.obsfin.ch\/wp-content\/uploads\/2020\/04\/Sinha.png 321w\" sizes=\"auto, (max-width: 150px) 100vw, 150px\" \/><\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n","protected":false},"excerpt":{"rendered":"<p>OF Discussion Board n\u00b019 &#8211; 27 August 2021 Question asked : \u00ab\u00a0Half a century ago, on Sunday evening of 15h [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":0,"parent":0,"menu_order":619,"comment_status":"closed","ping_status":"closed","template":"page-templates\/full-width.php","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"class_list":["post-3318","page","type-page","status-publish","hentry"],"_links":{"self":[{"href":"https:\/\/www.obsfin.ch\/fr\/wp-json\/wp\/v2\/pages\/3318","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.obsfin.ch\/fr\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.obsfin.ch\/fr\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.obsfin.ch\/fr\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.obsfin.ch\/fr\/wp-json\/wp\/v2\/comments?post=3318"}],"version-history":[{"count":1,"href":"https:\/\/www.obsfin.ch\/fr\/wp-json\/wp\/v2\/pages\/3318\/revisions"}],"predecessor-version":[{"id":3321,"href":"https:\/\/www.obsfin.ch\/fr\/wp-json\/wp\/v2\/pages\/3318\/revisions\/3321"}],"wp:attachment":[{"href":"https:\/\/www.obsfin.ch\/fr\/wp-json\/wp\/v2\/media?parent=3318"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}