 Olen kysynyt Hosea ja Joa, jossa ajattelin, että maailmastosyhteykset on todella tärkeää, mutta ajattelin, että sinulla ei olisi tärkeää, miten moni on tullut. Hosea sanoi, että moni pitäisi lennäämään, SSDR pitäisi lennäämään, jossa Joa sanoi, että Suomen Suomen Suomen Suomen pitäisi lähteä suomalaiset maailmastosyhteykset. Joten, olen ajattelin, että Hosea sanoi, että se pitäisi tärkeää, ja Joa sanoi, että se pitäisi tärkeää, jossa on tärkeää. Joten, kun lennäämään, jossa on vähän, koska joten en tarvitse, että moni pitäisi tärkeää, koska se pitäisi tärkeitä maailmasta, koska se pitäisi tärkeää maailmasta, ja se pitäisi tärkeää, ei ole mennyt, koska on se, että se on tärkeää, jossa on tärkeää. Saataisin, että maailmasta ovat todella tyhjellis manneria, jossa on tärkeää, which is my proposal, are given to countries, so it's an asset given to countries. But my point is that on top of that they should be used to finance IMF lending. Because today you have to raise money for IMF lending. The IMF has through capital increases of the IMF, through borrowing of different sorts that the IMF does. So my point is that that's totally useless. You could do everything with SDRs. Or in a proposal like yours, more global central bank, it will operate the same way. You use the money that you issue in the source of the financing, like in all central banks of the world. So except the central banks sometimes call them bond financing. But bonds are a form of lending. So it's the same. San Antonio wants to use SDRs to finance the IMF so that the IMF could lend. But he would also, I don't think inconsistent with also using SDRs as deposits in each country accounts for them to spend just as they want. And the only distinction is I focus just on putting money in people's account to spend for exactly the reason. What one wants to do is not increase the indebtedness of developing countries, but increase their ability to purchase. And use that purchase power to offset. They're not purchasing as a result of putting money in reserves. Thank you. Thank you for a very interesting talk. Joe, you mentioned that John Maynard Keynes has described a similar system some time ago. And Professor Fitzgerald, you suggested that your unreconstructed Keynesians. And it reminded me, I recently watched a lecture by a dear turner from the Institute of New Economic Thinking in which he said the title of that institute be a quiz upon him, an incentive to come up with new ideas. And he says he struggles to think of these new ideas. And every time he thinks he comes up with one, he finds out that John Maynard Keynes had written about 80 years ago. And I wondered if you had any sympathy with that feeling that he has. In the Bible it said nothing is new under the sun. So there may be, but on the other hand, the analytics that we talked about and there's a lot of analytics today are different from what Keynesians. Keynes had talked about. The institutional ideas. He had one idea that I think was very interesting, which was that he wanted to tax the reserve countries that have surpluses. Because he recognized that surplus countries exert a negative externality on the others by this deficiency in global aggregate demand. So in that perspective he was saying, you know, Germany is really imposing a cost on the global economy. And one way of, in some of our earlier work of putting in that kind of idea was to have the issuance of the global reserves be conditional on not having reserves, not having a huge surplus. Proposals. But the fact that he was talking about a world economy in transition in the sense that having got off the gold standard, which had been the great debate of his youth. Then as I think somebody mentioned, they were in a transition from a sterling dominated system to a dollar dominated system. So I think some of the ideas perhaps are coming back now because in a sense we're facing a transition of moving towards a multipolar world economically and to some extent presumably, you know, probably will be dead before it happens. But some different monetary system is going to emerge, which will reflect that change in the clear change in the trading balance and clear changes in the countries where capital originates from, you know, all those sort of fundamentals I think. So that's why I think the ideas are relevant. I mean it's not just because it's Keynes, it's because it's somebody writing about it. Andres Solimano. Two questions. Do you see, Jose Antonio, or the panel participants, any role for gold in the multi-currency or a reserve scheme that you're proposing? And the other is how long would it take to shift from dollar being the reserve currency, which is a country that has been running current account deficits, fiscal deficits for, let's say, almost three decades to even be such that this may affect the role of the dollar as a global reserve currency. And how long this substitution may take place. I mean if you look at history, the transition from the British pound to the US dollar lasted for, I don't know, 30, 40 years. So could you speculate or give some insights on this? Gold and the dollar as a reserve currency. Well, let me talk about gold. The only thing good that should be done with gold is to totally demonetize the world economy from gold. Actually, I do have an analysis in chapter one of what has happened with gold since the breakdown of the Bretton Wood system. And essentially, there has been a significant demonetization. In fact, there was a long term reduction in the demand for gold by central banks, particularly since the 1980s, not in the 1970s. And that has essentially continued, except that since the North Atlantic crisis, some emerging economies demanded a bit of gold, but even that in historical terms is extremely small. So the share of gold in global reserves, which is estimated both at official and then at market prices in the first chapter of the book, is now fortunately very low. Now on the role of the dollar, I don't know, Joe. So basically, the idea of spending resources to take gold out of the ground and then bring it up and then put it back in the ground is the kind of thing if you were an anthropologist looking at us, we would say that's very weird. So I really think it is weird. So as far as the transition, my view is basically introduce these new STRs, new global reserve currencies at the rate of 300, 400, 500 billion a year to make up for the deficiency of aggregate demand. And over a period of 20 years, it would become the dominant form of people holding reserves. I have one non-serious point, one serious point. One little monetary economics I know is taught by Roy Harrod, who told us that not only all the problems of the gold standard we all know well, but the other one was that the gold was produced by then the two most obnoxious regimes on Earths, which were Soviet, Russia and apartheid South Africa. But to be slightly more serious, if you're going to have other reserve currencies, particularly the euro and China as possible candidates, there have to be extra conditions. One of those is that you have to have a large and very liquid debt stock to trade in, as people were mentioning. And to date of course the Europe as a whole or the ECB has not been in a position to issue debt and doesn't trade in government debts in the right way to enable that to happen. So you couldn't have the euro as a reserve currency unless you have the central budget for Europe and in consequence a euro bond which is actually issued by the European Central Bank. And the second condition is you must be happy for it to be extensively traded offshore and that is one which the China is not willing at the moment for that to happen. So it's very difficult to see how either of those two extra candidates either reserve currencies or as the underpinning for Jose Antonio sort of basket could happen unless those changes take place as well. Richard Newfarm of the International Growth Center. Thanks for a terrific panel. This has been very informative. The question I'd like to ask is about the scenario that you might be holding in the backs of your minds for the political economy that leads to the implementation of some of these things. I mean we see we have the US administration focusing and threatening to withdraw from the multilateral system entirely trash the WTO probably the only reason that the Trump administration hasn't focused on the IMF yet is because he thinks it's part of mission impossible and not what it actually is. But I suspect that we also have problems in Europe as well with Brexit. What's the political economy scenario that leads to a reconsideration of these kinds of ideas. And I hope your answer is not another global crisis global crisis until you just added that I think that I had anticipated that the long deficiency of aggregate demand for instance. That we had after 2008 would have led to more demand for this kind of global reserve system. I thought that the instability that was exhibited in the contagion and financial markets in 2008 would have led to recognition and need for global reserve a global financial market cross border regulation. And neither of those have happened and even more disturbing is are the calls that I find understandable to reverse the IMF decision about the institutional view that those who make money out of cross border flows and make money out of instability are obviously opposed to it. So I think it's going to be a continuing battle. So maybe the right answer he has to do with having sufficiently progressive governments in the relevant countries that understand the economics of this is maybe the only condition on which this will go forward. I agree totally but I think one hope one source of hope may be emerging economies because as Joe mentioned for example the Chinese were very much pushing for a global currency. And sometimes the developing countries also push the developed countries to better regulate their own financial markets. And I've heard you know senior Chinese officials tell the US Treasury look you've got to get your house in order. Regulation markets well because if not we're not going to keep buying your Treasury bill. So I think there's a little bit of hope there particularly if they take a progressive line and as they have an increasingly important weight and as they can also create parallel institutions. I mean we saw that with the creation of the NDB in which incidentally the BRICS Bank in which Joe played a big role and the AIB have I think pushed already the World Bank to do a lot of more investment in infrastructure because they feel compelled to but they feel challenged and to the extent that say you have regional monetary funds and so on that are successful and that are used or swap arrangements. There's a lot of swap arrangements now amongst developing countries. So then that may push push the developed countries to do more. Yeah and just let me say one of the things I pointed out in my book making globalization work is that some of these ideas don't have to be global in nature. Exactly what Stephanie said. There are regional or even subgroups of countries like emerging markets that could establish a framework and then others could join it. Delay your framework. Okay. Now I have three small questions. Number one. What did the granting of SDRs by the IMF to the developing countries or whoever else be conditional on the use of these resources? Should they be used for capital account or can be used for capital account and should they find that's it. So it should be conditional on a certain number of routes. So perhaps sustaining the current account because otherwise you may use this money just bring money to Switzerland and that wouldn't be desirable. Number two. What did imply a redefinition of the quotas in the IMF? I mean the UIS has been so far I mean adamantly against I mean issuing SDR. And then as long as they have the largest voting shares I think that in the ability to convince other developed countries that basically that won't fly. And the third one is in a way what Stephanie mentioned that now there are all sorts of mini IMF cropping up in Asia. The Chinese mini IMF. The IMF does not want to increase quota in the IMF because China because basically they're building their own substitute IMF. So is it the idea of expanding SDR being sort of put backwards by the fact that there are other schemes which are emerging in rich developing countries? Short answers. There is no conditionality to any issuance of SDRs. That's how they were created. That's how they should continue to be. If you totally move the IMF into an SDR based institution, you don't need quotas as such because in a sense the SDRs that they accumulate in the fund will be their quotas. So that's an alternative. I mean that's been a long term proposal by those who have defended the idea of totally SDR based IMF. And on the other issue I must say that the IMF is not against today, not against regional funds. Of course it does want to have a kind of a bit of control. Actually we had a conference on that a few months ago which I participated. Actually they were against the Japanese proposal of the Asian Monetary Fund after the Asian crisis. But later on the Chiang Mai initiative which was the reincarnation of that idea, they did not oppose. So actually Michele Kandesu was the one who was opposed, actually probably pushed by Larry Summers to oppose the Asian Monetary Fund idea. Anyway, let me finish. We have four minutes, so let me use them as a dictatorial manner. But really to thank the three panelists, again Fintar who left, but to thank Fintar again for all the support in the elaboration of this book. Let me just finish with comments. I think one of the good features of the book is that it has a historical background to every topic that is discussed. This is of course who I learned from my mentor, Carlos Diaz Alejandro, who taught me to understand the present through history, which I deeply appreciate. I recognize that actually in my preface. The second one is that your ideas of the global research system actually mimic exactly what I say in the book. In the three fundamental problems, I call the Keynesian issue, I call the asymmetric adjustment problem because it focuses in the asymmetry between deficit and surplus economies, which you don't correct that, you generate a recessionary bias. The second is the tripping dilemma, the role of the US dollar, which by the way on the next last question, one thing that I have a graph in the book about the net liability position of the United States. One of the most problematic features that in contrast to Great Britain, which always had a surplus position, a net asset position, the US turned to net liability position with the rest of the world in the mid 1980s. But what is scary is to see the numbers in the last 10 years. They're really scary. So they run on the dollar, it could actually be, if it happens, if tripping is correct, at some point that may happen, it's really scary. And the third is inequities associated with the fact that it's basically emerging economies and developing countries that have to accumulate reserves to self-insure themselves against capital accountable utility. And that is an inequity, as Joe mentioned, it's basically emerging and developing countries transferring large amount of resources in very low yielding assets, which are the foreign exchange reserves. That's actually what makes sense to give SDRs instead of accumulating reserves in the system. And on the stable capital flows, which is the point that both Stephanie and Balpy pointed out, first of all, I totally agree with Balpy's idea that this is inherently on the stable part of the system. But it's basically vis-à-vis emerging and developing countries. Although the European periphery during the crisis shares some features of exactly that. And sometimes some European countries have continued to do so. But basically, historically, all that volatility that Balpy showed is for emerging and developing countries. Now, the market segmentation is actually what you do through capital accountable regulations. Actually, just for example, I mentioned one thing that Colombia does. Colombia banks are now expanding to Central America and South America. We have this currency mismatches policy for every individual currency. So we estimate what is the individual currency mismatch of every bank. And they have limits on how much probably the US banks should do the same and the US regulation. But part of the problem is that in the discussion on international financial regulation, currency mismatches are nowhere. I mean, the financial stability board has played no attention to currency mismatches. I think that's one of the fundamental problems. Or the balance sheet at all. Or the balance sheet at all. Actually, you also put the balance sheet mismatch as a constraint. Anyway, that's for example something that... We call about not only price-based regulation, but also administrative or quantity-based regulation. That sort of regulation. In Colombia, which has a long tradition of regulating capital, the capital account does that regularly. Actually, interesting, they had no constraints on doing that. There are constraints on other things. For example, on price-based regulation actually, particularly the US agreement with the US, it does constrain severely that although Colombia negotiated better than Chile. That close in the regulation. Anyway, there are many ways of regulating the capital account that basically is through this sort of regulatory tools that you use all the time for domestic financial regulation. Why the hell don't banks use it or countries use it to regulate the international financial transactions of the countries. Anyway, the other point is maybe you want... I mean, I totally support the idea of regulation in the source countries, which Stephanie mentioned, except that that doesn't seem viable. I mean, what the IMF does in the institutional view is try to tell developed countries, don't try to push more of these regulations on developing countries. That's exactly what they actually state in a very, of course, convoluted form. But that's what they say in the institutional view. Of course, by the way, the European countries in the early post-world period, as I point out, were in favor of the US-related capital flows to try to avoid the capital flight from Europe into the US in the early post-world period. And the basic problem was not Keynes, was not Harry Dexter White, was the US financial sector pressuring the US government not to do that. At that time, it is true today. Stephanie, one short point. Yeah, one very short point on why capital controls are important. You can, through domestic financial regulation, regulate the mismatches of, for example, currency mismatches of banks and even indirectly of corporates that borrow via banks. But if a company goes directly and issues are born in New York, you can't do anything through domestic financial regulation, the only way you can get at that is through capital controls. And increasingly, even the G20 have participated in the workshop, are particularly worried now about corporate debt in foreign currency. And the best way of dealing with that is either some administrative limits, which is difficult, or through capital control. The other point I want to stress is that Keynes lived in a world of much smaller relative capital flows. And in fact, he liked it. I mean, he has this famous paragraph about let trade and friendship and culture and travel be international, and let capital be homesprung. And I think this is quite radical today. But should we think about a world where private capital flows are relatively smaller in proportion to official flows, and we have more of these nice development banks nationally, regionally and internationally, we have less unstable capital. I mean, it's difficult politically because these guys are making so much money, but it's not for the good of the world economy. Just a small historical correction. The peak of foreign assets prior to the First World War was extremely high. So Keynes knew a world in which there was significant capital flows. Of course, it came down later on, and of course it collapsed during the Great Depression. The discussions actually, why even the U.S. was in favor of some capital account regulations, was exactly because of the experience of the interwar period, the same.