On the even of the G20 Summit, World Bank Chief Robert Zoellick has what will be a much-talked-about op-ed in the FT regarding the topic du jour: the currency war.
In it he lays out multiple ideas including a specific plan for yuan appreciation, an end to unilateral currency interventions, a focus on growth via “supply-side-bottlenecks (i.e. structural adjustment), and perhaps most surprisingly: gold.
The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.
He doesn’t go much further down the road on this idea, and it doesn’t sound like a truly hard gold standard, but rather that the world would respect gold as the ultimate arbiter of a currency’s value, as a measure of who is failing to keep their currency stable.
Should be an exciting G20.