Introduction to the article :
This is an analysis of the article ‘’Why Should the Global Reserve System Be Reformed?’’ from José Antonio Ocampo , he is a Professor and Director of the Economic and Political Development Program at the School of International and Public Affairs and Fellow of the Committee on Global, Thought at Columbia University; He holds a BA in Economics and Sociology from the University of Notre Dame, and a PhD in Economics from Yale University .He has received a number of personal honors and distinctions, including the 2008 Leontief Prize for Advancing the Frontiers of Economic Thought and the 1988 Alejandro Angel Escobar National Science Award of Colombia. He has published several articles about global financial crisis, …show more content…
Furthermore ,the weakening of the dollar in the second quarter of 2009, mixed with concerns about the stability of the world's major currency linked to the large fiscal deficit managed by the US during the current crisis, is expected to continue for some time, which would have led to a rapid accumulation of debt Public sector . This is an article that shows that the dollar standard in which the world has lived since the early 1970s has three basic flaws .First of all; it puts the burden of adjustment on deficit countries, not on surplus countries. The main exception is the United States, which so far managed to finance its deficit by issuing dollar liabilities held by the rest of the world, thanks to the reserve currency status it has, second; the instability of the system, because it makes the value of the main reserve currency dependent on US macroeconomic policy and US balance of payments fluctuations and associated domestic deficits. Since the parity between the dollar and gold has been abandoned in 1971, the world has witnessed increasingly intense courses in the value of the dollar and current account in the United States. The dollar has lost what it should have any reserve assets: a stable value. The central bank governor had recently confirmed this key point. Third and finally; the system was inequitable, because it imposed the transfer of resources from developing countries to industrialized countries that provided reserve currency. The accumulation of international reserves is the main defense of developing countries for global financial instability in addition,
This is an analysis of the article ‘’Why Should the Global Reserve System Be Reformed?’’ from José Antonio Ocampo , he is a Professor and Director of the Economic and Political Development Program at the School of International and Public Affairs and Fellow of the Committee on Global, Thought at Columbia University; He holds a BA in Economics and Sociology from the University of Notre Dame, and a PhD in Economics from Yale University .He has received a number of personal honors and distinctions, including the 2008 Leontief Prize for Advancing the Frontiers of Economic Thought and the 1988 Alejandro Angel Escobar National Science Award of Colombia. He has published several articles about global financial crisis, …show more content…
Furthermore ,the weakening of the dollar in the second quarter of 2009, mixed with concerns about the stability of the world's major currency linked to the large fiscal deficit managed by the US during the current crisis, is expected to continue for some time, which would have led to a rapid accumulation of debt Public sector . This is an article that shows that the dollar standard in which the world has lived since the early 1970s has three basic flaws .First of all; it puts the burden of adjustment on deficit countries, not on surplus countries. The main exception is the United States, which so far managed to finance its deficit by issuing dollar liabilities held by the rest of the world, thanks to the reserve currency status it has, second; the instability of the system, because it makes the value of the main reserve currency dependent on US macroeconomic policy and US balance of payments fluctuations and associated domestic deficits. Since the parity between the dollar and gold has been abandoned in 1971, the world has witnessed increasingly intense courses in the value of the dollar and current account in the United States. The dollar has lost what it should have any reserve assets: a stable value. The central bank governor had recently confirmed this key point. Third and finally; the system was inequitable, because it imposed the transfer of resources from developing countries to industrialized countries that provided reserve currency. The accumulation of international reserves is the main defense of developing countries for global financial instability in addition,