Yesterday China upped the pace of the power shift from a US-dominated world monetary order, to a more global one. China and its Asian partners have just announced their strengthening of a $120 billion emergency currency pool. This is evidence of a new Chinese strategy unveiled in recent weeks and comprising three elements:
1. substantial reform the IMF;
2. the growth of a powerful Asian alternative to the IMF; and
3. a world currency.
China’s new found confidence in addressing global economic governance is likely to spur policy-makers on both sides of the Atlantic to get serious about addressing major issues of governance reform, emergency lending, and exchange rate cooperation. Where years of developing country efforts have failed to push this debate, China’s potent combination of pushing for reform and at the same time bolstering challenging alternatives is likely to finally have purchase.
