On November 30 afternoon, Tao Xiang International Finance Lectures (No. 28), co-organized by the School of Finance of Renmin University of China (RUC) and the International Monetary Institute (IMI), was held online. Themed on “The Past, Present, and Future of the International Monetary System”, the lecture was joined by Zhang Zhixiang, former Director-General of the International Department of People’s Bank of China (PBoC) and former IMF Executive Director for China. The event was moderated by Wang Chenxi, Assistant Professor of the School of Finance, RUC. Follow participants of the lectures include Tu Yonghong, Deputy Director of IMI and Dean of the Yangtze River Economic Zone Research Institute of RUC, and Lu Dong, Associate Professor of the School of Finance, RUC. Students from the School of Finance of RUC attended the lecture.

Director-General Zhang Zhixiang delivered a speech themed on “The Past, Present and Future of the International Monetary System”. He discussed the past, present, and future of the system and gave an in-depth analysis of the major issues of all stages. Looking into the future, he pointed out that the existing international monetary system is no longer compatible with current global and financial development. As US supremacy fades, we should identify the contradictions of the international monetary system and respond properly.

The first part focused on the past of the international monetary system which involved three main issues, namely the five plans that came up before the Bretton Woods Conference, the Triffin dilemma, the establishment of the Special Drawing Rights (SDRs), and the announcement by the US to decouple the US dollars from gold. The battle between Keynes plan and White plan was the main topic of the Bretton Woods Conference. A gold standard that set the price of gold at 35 US dollars an ounce was established. Other countries whose currencies are pegged to the US dollar are expected to maintain stable exchange rates and should report to IMF when the fluctuation was higher than 1%. Triffin wrote in an article that there was an irreconcilable contradiction between the US current account deficit and the goal of keeping US dollars stable. The essence of the problem lies in the decline of US national strength and its inability to keep the price of gold at 35 US dollars.

The second part was about the current situation of the international monetary system in the Post-Bretton Woods Era. The past 50 years have witnessed nearly 200 economic and financial crises around the world along with fluctuating exchange rates which were caused by dollars. Anoop Singh, a member of the Research Group on Reforming the International Monetary System, has proposed adapting global liquidity for the global public good, with the IMF playing a role in maintaining international financial security when there are irregular flows. He further emphasized that SDRs have a role to play. To this end, he proposed a substantial increase in the allocation of SDRs to enable the IMF to play its part, which is desirable given the current situation. As one of the founding members of the IMF, China has made it an increasingly important task to work with INF on deepening the reform of the economic and financial system and to develop talents to participate in policymaking.

The third part looked into the future of the international monetary system. In this regard, we must be clear that the existing international system is no longer in line with global and financial development. During the past 80 years, the international monetary system has witnessed the decline of US national strength and the fall of US dollar supremacy. In the debate with Keynes, White said that whoever owns the gold makes the rules. On 15 August 1971, the US announced that the dollars were decoupled from gold, indicating that the US cannot make the rules anymore. The US has adopted other beggar-thy-neighbor approaches to maintain world domination politically, economically, and financially, though its supremacy is declining. The picture will continue for some time, and we must be prepared. That’s to say, we should investigate the contradiction of the international monetary system and work out a universal solution to fix the liquidity issue.