QE 2.0 and the Emerging Multipolar World Monetary System

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When, in a few years from now, political analysts will look back on November 2010, they will likely see it as the moment when the debate over a new multipolar world monetary system became really serious. On Nov. 2, President Obama and Democratic Party suffered severe losses in the US mid-term elections – mainly due to the protracted economic malaise in America. On Nov. 3, the Federal Reserve decided to buy US treasury bonds (and state and municipal bonds) worth $600 billion (a lot more will likely follow). The international answer was unprecedented – in the negative. Then, on Nov. 8, Robert Zoellick, the head of the World Bank and a key figure of the US establishment, suddenly proposed the creation of a “new monetary system”.

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The Reconfiguration of the World Economy – and Germany’s Geo-Economic Readjustment

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In 2009, we have witnessed a “world in transition.” The global economic-financial system has not disintegrated, as many feared a year ago, but both the world economy and the global political system are being profoundly transformed. Old habits have become unsustainable – and are indeed being replaced by new attitudes.

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China’s Initiative for a New World Monetary System

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Just before the beginning of the G-20 Financial Summit in London, China has launched an initative which aims at replacing the US dollar as the global reserve currency. According to the plan, the IMF’s “Special Drawing Rights” will become the reserve currency of the world monetary system in the near tearm, in the longer-term a supranational, “commodity-based” currency, derived from John Maynard Keynes “Bancor” concept, will assume that role. Russia’s proposals for a new financial architecture point in a similiar direction. Preliminary reactions from politicians and economists in Europe and Latin America have been cautious, but open-minded, while President Obama sees “no need” for a new world reserve currency. No doubt, China has kicked off a discussion which won’t go away.

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