Building a new monetary, financial and energetic framework through an international negotiation

, by CALAME Pierre

A. Understanding the deep causes of the crisis
1. The current financial crisis is a proof of the lack of global governance. The crisis is about
much more than the shortcomings of national banking regulations. It has forced the European
Union to act as one. Once again, the EU moves forward thanks to the disequilibria that its very
existence creates and which make it progress. The creation of the euro had raised the question of
the coordination of economic and fiscal policies. Member states had not wanted it. The necessity
of a coordinated answer to the financial crisis has led them to change their minds. Similarly, once
the fire is put out by immediate measures which can restore confidence, the quest for a middle
and long term answer to the current financial crisis must lead to a progress in global governance
– and be understood as such.
2. Global governance has to be established between the main regions of the world. After
this financial crisis, nothing will ever be the same. The United States made up half of the world’s
GDP in 1945. Today, it is only a quarter. In 1944, when the first Bretton Woods conference took
place, the United States could make the dollar a world currency and ensure its gold convertibility.
Exchange rates between the main currencies were fixed, and regularly renegotiated. This system
has eased the reconstruction of Europe. But in 2008, this period came to its end. For the first
time since World War II, a major financial crisis has started within the United States. This crisis
has hurt the heart of the system in two ways: first, the United States and Wall Street; second, the
trust between the major banks. This is why a summit on the monetary and financial system must
be organized by four large regions of the world, which are to play a key role in the coming
knowledge based economy: Europe (speaking as one); the United States; China; and India. The
G8, even enlarged, is not appropriate. Four of its eight members are European countries. When,
in 1975, Giscard d’Estaing created the G6, and later the G7, this made sense and it reflected the
reality of the world at the time. But this is no longer the world we live in.