Zhou Xiaochuan: We Need An International Currency

Ronald R Cooke
The Cultural Economist
Posted Mar 30, 2009

China wants to divorce the dollar. Good move. The dollar is on the brink of considerable depreciation. Premier Wen Jiabao is concerned looming inflationary pressures will sharply decrease the value of American debt held in Chinese banks. In order to encourage create greater monetary stability, Zhou Xiaochuan wants to create an international currency unit that can be used in trade as well as a standard against which other currencies can be pegged.

Zhou, an economist who is currently the Governor of the Peoples Bank of China, is absolutely right. We do have a global economy. To facilitate trade, we need an international currency. I mean, how can we have a global economy unless we also have a global currency? The dollar, which used to provide the functions of a reserve currency, has been decimated by Congressional ineptitude, administrative failure, and ideological ignorance. Few believe it will recover any time soon.

So. The idea of an international currency is worth considering. Assuming the creators are able to make policy decisions based on constructive wisdom. If the dialogue degenerates into a political power play among participating nations, then nothing good can come from the effort.

By the way, we also need to create a way to regulate the international financial system, uniform international commercial law, and a uniform way to regulate international corporations. Current practice invites confusion, conflict and confrontation.

But for now, I’ll settle for a constructive dialogue on the subject of an international currency. Will participants choose to use gold as the peg?

Ron

Ronald R. Cooke
website: The Cultural Economist
email: tce@tce.name

About The Cultural Economist - Ron graduated with an A.B. in Economics from Bates College. He has been an auditor, line manager, computer salesman, marketing manager, product planning manager, and V. P. of Marketing. A management consultant by inclination, Ron has a comprehensive background in business development, product planning, market research, and industry analysis. He has authored multiple market research reports, contracts, business plans and operations research studies for corporate clients in 12 countries. Prior experience includes technology assessment, the evaluation of corporate financial performance, and the negotiation of corporate acquisitions.

Ron is a former instructor with UCSC, and developed the curriculum for a science based approach to decision analysis. He has pursued the study of Cultural Economics since 1969, and has authored "Oil, Jihad and Destiny," [Amazon,] a thought-provoking research report on oil depletion (Opportunity Analysis - 2004, and revised in 2007), and "Detensive Nation," a book that redefines the role of government in an Energy Detensive EcoSystem (The Cultural Economist - 2007).

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