ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

Articles By Avinash Persaud

The Future of the International Monetary Fund

Are our international financial institutions fit for the future? This is a question being asked at the annual meeting of the International Monetary Fund in Marrakesh. If one wants to think deeply about the IMF’s future, one need to go no further than to consider its past. Those assembled at Bretton Woods in 1944 were haunted by the memory of the beggar-thy-neighbour policies that contributed to the Great Depression and the march towards war. But much has passed since and ambition has been lost. Here are five things it could do today to make our international financial system better suited for an age of global shocks and crises, more symmetrical and better able to drive financial flows towards development.

 

India’s Turn to Save the World from the Next Crisis

A silent wave of financial stress is running through the world financial markets. India, the incoming G20 President, must provide the leadership necessary to save the world from an emerging market debt crisis. The proximate cause of the crisis is the combination of COVID-19 debt and a jump in the US dollar. Fighting the dollar’s appreciation with higher interest rates on debt will push the world into recession. Faced with a rich-country commercial bank debt crisis in 2008, the G7 announced that they would use all the available tools and take all necessary steps to save the banks. We need to do the same today for countries. India should press the IMF to immediately increase access to its unconditional rapid fi nancing facilities and temporarily suspend interest rate surcharges. Avinash

Cryptocurrencies Are a Dangerous and Retrograde Step

Enthusiasts for cryptocurrency say with revolutionary zeal that this is the future of money. We have seen private money or money tied to a rigid formula in the 19th century that was marked with frequent financial instability and pedestrian growth. The gold standard was adopted to bring stability but was abandoned 50 years later when it deepened and spread the Great Depression. Someone needs to speak up for the benefits of regulated fiat money, which, in the last 50 years, has been associated with more growth and stability than over the gold standard era.

A New Development Model for the New Economy

The new economy needs a development model that is people-centric, not production-driven. Emphasis, therefore, must be on the development of human capital. But, public education and health are not enough to break out of the middle-economy track. The world’s most pressing problems, from climate change to the future of work are all manifestations of inequality. The role of government is to not only be a more effective provider of learning and health, but also to be an agent for greater access to opportunity and changing patterns of ownership at all levels.