A Global Central Bank? Businessworld
Percy Mistry was back in town. The timing was impeccable: just a week after the crisis erupted on Wall Street. The message was unchanged: make the rupee fully convertible by 2012.
His views on the origin of that crisis were relevant: that the Federal Reserve printed far too much money, and that the regulators did not regulate the mortgage market. The lesson he drew was that regulation of liquidity needed to be internationalised: if there was going to be an international currency like the dollar, its supply could not be left to a national authority like the Federal Reserve. The Federal Reserve acted irresponsibly, and brought the entire world financial system to the brink. But it was not alone. The acceptability of the dollar brought forth the supply of pseudo-dollars such as the Euro-dollar.
So Mistry is right about the need for international regulation of currency, but it is unlikely to happen soon. Central bankers are a convivial lot; they meet in luxurious resorts at least two or three times a year and confer. They are very chummy (via Businessworld – A Global Central Bank?)
The other interesting thing …
How did Percy Mistry get appointed to the Percy Mistry Committee for Mumbai as a World Financial Centre. Big business put him there – and that is why he possibly cant see too far.
What a shame …
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A global currency may be desirable if it cannot be created out of thin air. It needs to be backed by the tangible assets such as precious metals or like. This will truly even the playing field for everyone.
Most of the angle saxon countries have manipulated their currencies far too long and developing countries have been playing a catching game. Its like a carrot at the end of the stick. As soon as developing countries earn some leverage, more currency (not money) is printed thus devaluing the value held by the developing countries.
I would rather have a global currency not manipulated by any financial institution.
Well … Nick … Two things!
One – if it was just a catching up game, it would not be so bad. If you look at it carefully, what it means is that the poor are subsidizing the rich – and the rich are doing the best to keep the poor, poor. That, to me, is not acceptable.
Two – Global currency not manipulated by any financial institution … is wishful thinking! How can we make it happen is the question?
Multiple currency systems – the dollar, Euro and a Third Global currency – with the option of private ownership rights of gold will guarantee a safe and secure financial system.