The case for reserve currency competition

In January 2010, the French president, Nicolas Sarkozy, said: "We need a new Bretton Woods, we cannot put finance and the economy back in order if we let the disorder of currencies persist." He is right. The international monetary system needs change. His call follows earlier proposals by the Chinese and Russian authorities to foster international currency diversification.1 Why is change needed? It is needed to restore discipline to the international economy so that we avoid the build-up of larg