As in the end of the floating currency regime and a return to fixed exchange rates. This could be somewhat good for the U.S. but the downside potential is frightening.
From Bloomberg:
Oct. 16 (Bloomberg) -- European Union leaders pressed for an overhaul of the global financial system to prevent a repeat of the credit crunch that sparked the biggest stock-market selloff since the Great Depression.
EU leaders called for a global summit as soon as next month to rewrite the 1944 Bretton Woods accord that paved the way for Europe's post-World War II reconstruction and set up the institutions that oversee the world economy today.
The end of BWII has been foretold by some blogging economists including Roubini, but this is the first time I have seen actual action threatened in the press by one of the key players.
It is certain that there are others more qualified than I to comment on all the implications of such a change. The immediate upside may be an end to currency games played by Japan, China, et. al. On the face of it this would seem to help strong currency countries, BUT only if the new peg is trade neutral. The potential downside risk - the end of the U.S. dollar as the global reserve currency - is more likely if non-EU/UK countries demand a seat at the negotiating table.
There is also talk of some type of global international financial regulation in Europe, though no consensus yet on how, or if, such a thing will be undertaken.
Prime Minister Brown, author of the British bank-bailout plan that was copied across Europe and in the U.S., called for an end- of-year deadline to place each of the world's top 30 banks under the supervision of a panel of regulators from the countries where it is active.
``The reform of the international financial system is not only necessary to prevent a crisis happening again, it is essential to end the current crisis,'' Brown said today.
Today John Mack, CEO of Morgan Stanley, called for just such regulation on CNBC as posted in this diary. Only time will tell if a global regulator will emerge; the Fed and the U.N. being the front running candidates at this time. Interesting times...