The Transmutation of the International Monetary System
March 18, 2016 JC Collins
By JC Collins
Ever since reading the George Soros book called The Alchemy of Finance I have accepted the fact that there is a deeper meaning and understanding to the process of financial transmutation. The quest for the Philosophers Stone, which is the corner stone of all alchemical pursuits, ends in failure for so many because the journey must be one which is directed inward.
The Prima Materia, which is the main ingredient of the Philosophers Stone, is not a physical substance but the formless void of life itself, which is consciously or unconsciously molded to the desires of the individual.
As such, self-awareness and self-realization are the first steps towards all transformation.
The blending of the international monetary transformation with the more esoteric concepts discussed here on POM have been suggested in numerous posts over the last two years. The reason for this is that the international monetary authorities themselves are using the same process and symbolism as the method of transformation.
Like the phoenix rising from the ashes of its former self, the new multilateral monetary framework is being built from within the collapsing framework of the old.
Reader, fellow researcher, and POM commentator Alan recently provided a link to a speech by International Monetary Fund Managing Director Christine Lagarde titled Vietnam – Gearing Up for the Next Transformation. In that speech she states the following:
“So what can you do about all this? How can you become a powerful ingredient in this recipe for economic transformation?”
“Start by transforming yourself and your environment.”
The alchemical reference is obvious and should be considered as a method of transferring a common understanding of the individual challenges and processes involved in completing the full transmutation of the existing international monetary framework region by region.
She also said:
“In fact, we are likely to see a massive further increase in urbanization in many emerging and developing economies over the next 15 years. This could require global infrastructure investment of up to $90 trillion.”
Most readers will immediately think of the POM prediction that there is a massive commodities boom coming in the next few years. It had been previously suggested that this boom would start this year, which so far could be the case, as prices of commodities slowly begin to ascend. The infrastructure development which has to take place, not just in emerging countries, but also in the developed nations, will ensure this commodities boom.
Another reader, fellow researcher, and POM commentator Mark provided additional information with his link to an IMF article titled IMF Launches Debate on the Future of the International Monetary System. This article was loaded with information that further confirms the POM thesis and gives us a stable footing from which to begin our own understanding of this important process in the financing of the world.
Some of the POM topics and confirmations covered in the IMF article are as follows:
[list="text-align: justify;"][*]The much discussed current account imbalances between nations.
[*]The needed expansion of reserve currencies.
[*]Ongoing capital flow volatility.
[*]How the normalization of monetary policy will create a transition period of volatility.
[*]The integration of the emerging markets into the international monetary system.
[*]Regional financing arrangements, such as the Chiang Mai Initiative, and the need to work closer with the IMF. Reference the POM post titled Meet the Asian Monetary Fund.
[*]And finally, it discusses a broader use for the Special Drawing Right, based on the inclusion of the Chinese renminbi, which has been a cornerstone of the POM thesis. The article states:
[/list]
“Lastly, with the addition of the Chinese renminbi to the SDR, our membership is asking us to examine the broader use of the SDR in the international monetary system, and that’s something that we will do in the months ahead.”
This is a very exciting time to be interested in international monetary transformations. Who would have thought that such a dry topic would turn out to be so fascinating and enlightening? The full IMF article is reprinted below. – JC
IMF Launches Debate on the Future of the International Monetary System
The IMF is embarking on a study to understand the challenges facing the international monetary system, identify the system’s shortcomings, and lay the basis for reform.
The international monetary system is the framework that facilitates the exchange of goods, services, and capital among countries and sustains sound economic growth. To be effective, this framework must balance the needs of individual economies and the system as a whole—and do this over time, as economic and financial relationships change.
In an interview, Siddharth Tiwari, Director of the IMF’s Policy, Strategy, and Review Department, discusses the new study, the main challenges facing the international monetary system today, and how he sees the IMF’s role going forward.
IMF Survey: Why has the IMF decided to undertake this work now?
Tiwari: The IMF is at the center of the international monetary system—many people see the Fund as the system’s guardian. The last regular review was done in 2011, and a lot has happened at the IMF—and in the world—in the intervening years. At the Fund, financial sector surveillance has been strengthened, integrated surveillance decision was introduced, spillover analysis was broadened along with other work on interconnectedness, and we’ve overhauled our lending toolkit and sharpened our focus on risks and vulnerabilities.
The IMF’s firepower has also increased, to about $1 trillion. Quotas were increased, the New Arrangements to Borrow were brought on stream, and bilateral borrowings were undertaken. So it is time to review the system again.
IMF Survey: What is your diagnosis of the international monetary system today? Is it working?
Tiwari: A series of structural shifts is taking place in the global economy, and the confluence of these shifts is raising tensions and risk. First, although current account imbalances have shrunk in the post-crisis period, this phenomenon mainly reflects the compression of demand in advanced economies. So the problem of current account imbalances is still with us.
Second, the central role of one or two major reserve currencies means that developments in one economy can have significant impact on others, constraining domestic policy choices.
Third, as economies become more interconnected, episodes of capital flow volatility are becoming a permanent part of the landscape.
Fourth, while a lot of work has been done on the financial sector side—especially on financial institutions and the transmission of risk—nonbank financial institutions have become significant players, and that needs to be taken into account.
And finally, three reserve currency areas—the United States, the euro area, and Japan—will need, over time, to transition out of unconventional monetary policy, which will create a period of volatility for emerging markets. The global financial safety net will thus need to be strengthened.
IMF Survey: What emerging challenges do you see on the horizon for the international monetary system?
Tiwari: A key challenge is that post-crisis growth in advanced economies needs to be raised. When we were at the epicenter of the crisis, emerging markets managed to remain anchored by using their buffers, and it was expected that there would be a “handoff” of sorts from emerging markets to advanced economies in a few years. But that handoff is not happening.
A related issue is to ensure that the dream of globalization—that living standards in emerging markets and developing countries would, over time, converge to those in advanced countries—is not lost.
A further challenge is China’s rebalancing, which needs to happen. Growth will be lower, but likely safer (although this will inevitably have consequences for other economies).
Then there is the historic commodity price decline that necessitates adjustment for oil-producing countries in the Middle East and other commodity exporters, which need to find a new business model.
Finally, there are differences in monetary conditions in the world’s major economies. This asynchronous monetary policy among the United States, Europe, and Japan signals continued volatility. I would see these as the major issues ahead of us.
IMF Survey: What role should the IMF play in the international monetary system going forward?
Tiwari: The Fund remains at the center of the system. As we monitor our member countries’ economies, we must ensure that imbalances do not emerge in different parts of the world—especially the buildup of financial imbalances. We also need to ensure that emerging markets integrate into the international monetary system so that they achieve higher living standards. Financial development and deepening will be important for many member countries, especially in periods of greater market volatility.
Markets can be unforgiving for emerging markets right now. The process of convergence will involve emerging markets running small current account deficits over a period of time and making use of capital inflows to finance those deficits. So inflows need to be more stable for a longer period of time, and we should look at how to make them safer. Part of the solution lies with macroprudential policy; part will lie in the balance between debt and equity.
The IMF’s contribution will also include the provision of an adequate global financial safety net. This safety net, or lending framework, has to respond to three needs for the global economy: encourage better policy making, finance adjustment at a reasonable pace, and provide insurance to “innocent bystanders” who may be affected. Another level of the safety net is regional financing arrangements, such as the Chiang Mai Initiative, and the IMF needs to find a way to work more closely with them.
So while the Fund is at the center of the international monetary system, we are part of a larger system with central banks and other standard-setting agencies. Our role is to provide analysis and a shared understanding, but the onus will lie on the membership to take reform forward.
IMF Survey: What are the next steps for the IMF’s work in this area?
Tiwari: We just had an initial discussion at the IMF Executive Board on the role of the IMF in the international monetary system. Three work areas were identified that were already in the work program: how to make capital flows safer, a strengthened global financial safety net, and the role of the SDR.
The first issue will comprise different phases. The first phase is to take stock of capital flows—their volatility and direction. The second phase, to take place mid-year, will involve taking stock of country experiences in dealing with capital flows in the context of the IMF’s institutional view. And the third phase, to start toward the year’s end, will examine what we’ve learned from country experience and whether the institutional view needs to be revisited.
On the global financial safety net, there will be a stocktaking paper to be discussed in the coming weeks, followed by a paper on the size of the IMF. Both papers will be the backdrop to the subsequent quota discussions. In this stream of work, we will consider whether our safety net is adequate to protect every segment of the membership during periods of crisis.
Lastly, with the addition of the Chinese renminbi to the SDR, our membership is asking us to examine the broader use of the SDR in the international monetary system, and that’s something that we will do in the months ahead.
IMF Survey: What do you expect the most difficult issues to be in terms of political buy-in and support?
Tiwari: Having countries agree on a framework to make capital flows safer will be among the issues that will require a lot of work.
But this is essential and goes hand in hand with a stronger global financial safety net.
But this is essential and goes hand in hand with a stronger global financial safety net.
Today at 6:15 am by Rocky
» Starting to question the parties responsible for implementing projects in Basra
Today at 6:14 am by Rocky
» About $6,000 per capita GDP in Iraq
Today at 6:13 am by Rocky
» Nineveh complains that its companies are denied entry to the “currency auction” to obtain dollars
Today at 6:11 am by Rocky
» By 6%.. A “significant” decline in the number of those eligible to vote in the Kurdistan Parliament
Today at 6:09 am by Rocky
» Stripping the Minister of Oil of his powers
Today at 6:07 am by Rocky
» Minister of Communications: We are proceeding with the procedures for implementing the national lice
Today at 6:06 am by Rocky
» Planning: Next week discussing plans for the year (2025)
Today at 6:05 am by Rocky
» Agricultural loans and supplies for farmers and growers
Today at 6:04 am by Rocky
» Government proposal to include private sector workers in residential cities
Today at 6:03 am by Rocky
» Economist: Demand for food leads to higher prices
Today at 6:02 am by Rocky
» Minister of Industry inaugurates pivot irrigation systems production project
Today at 6:01 am by Rocky
» “We won’t be able to live here”: Drought threatens Iraq’s marshes
Today at 6:00 am by Rocky
» Amendment of the Hajj Commission Law
Today at 5:58 am by Rocky
» In front of the storm
Today at 5:57 am by Rocky
» An internal national equation to face challenges
Today at 5:56 am by Rocky
» Cabinet approves national initiative to support energy and reduce emissions
Today at 5:55 am by Rocky
» Completion of a strategic road at a cost of (64) billion dinars
Today at 5:54 am by Rocky
» Government proposal to include private sector workers in residential cities
Today at 5:53 am by Rocky
» Parliamentary migration to {Sabah}: The return of (3) thousand displaced families to Mosul
Today at 5:52 am by Rocky
» Next week.. Planning discusses (2025) projects
Today at 5:50 am by Rocky
» Al-Sudani welcomes reopening of Swiss embassy in Baghdad
Today at 5:47 am by Rocky
» Agricultural guide in the face of climate change
Today at 5:46 am by Rocky
» Planning: The annual inflation rate is slight and does not exceed 3%.
Today at 5:45 am by Rocky
» Digital Banks in Iraq
Today at 5:44 am by Rocky
» Minister of Trade: Iraq is food secure for a whole year
Today at 5:43 am by Rocky
» Iraqi oil exports to the United States fell last week
Today at 5:41 am by Rocky
» Planning confirms its readiness to conduct the population census on the scheduled date
Today at 5:40 am by Rocky
» Similar to 2014... Will Iraq resort to reducing expenditures to cover the budget deficit?
Today at 5:38 am by Rocky
» Border disputes between Iraq and Kuwait return to the forefront and "options" to resolve them
Today at 5:36 am by Rocky
» Israel targeting Iraqi sites is possible.. Iraq is facing an accumulated strategic mistake since 200
Today at 5:35 am by Rocky
» Al-Hakim and the Iranian Ambassador call for the application of laws and outcomes of international l
Today at 5:32 am by Rocky
» Regional elections.. Barzani's party complains of "increasing conspiracies" and aims at parties in B
Today at 5:31 am by Rocky
» Al-Sudani's visit to the United Kingdom on the table of his dialogue with the British Ambassador to
Today at 5:29 am by Rocky
» Expert opens the file of the maritime agreement with Kuwait and indicates a Kuwaiti “fraud” against
Today at 5:28 am by Rocky
» Kuwait revokes citizenship of those accused of stealing the century in Iraq
Today at 5:26 am by Rocky
» Karbala: The completion rate of the first phase of the development project of Al-Maamalji neighborho
Today at 5:25 am by Rocky
» What will Iraq gain from Israel's conflict with Hezbollah in Lebanon?
Today at 5:20 am by Rocky
» Rafidain Bank announces the collection of more than four trillion dinars electronically for the bene
Today at 5:19 am by Rocky
» Planning: The annual inflation rate in Iraq is slight and does not exceed 3%
Today at 5:18 am by Rocky
» Minister of Communications: We are proceeding with the procedures for implementing the national lice
Today at 5:17 am by Rocky
» Baghdad Governor: The private sector is a key partner in the development process
Today at 5:15 am by Rocky
» Resources: 4 million acres of agricultural land depend on groundwater
Today at 5:14 am by Rocky
» Al-Saadi: Iraqi parliamentarians discuss canceling privileges for Jordan due to Iranian strike on Is
Today at 5:13 am by Rocky
» Government Advisor: Development Fund Provides Great Support to Private Sector
Today at 5:12 am by Rocky
» Blackmail and American veto... Iraq wants an umbrella to end violations
Today at 5:11 am by Rocky
» Pessimistic scenarios about war.. Baghdad: Iraqi airspace is not completely secure!
Today at 5:09 am by Rocky
» 8 months after the formation of local governments.. Have they achieved what they promised?
Today at 5:08 am by Rocky
» MP calls on Nineveh Council to end political differences and return to the dialogue table quickly
Today at 5:06 am by Rocky
» Al-Abadi: It is not permissible to rush headlong into war for personal gain
Today at 5:05 am by Rocky
» More than a billion dollars in sales from the Central Bank of Iraq during the week
Today at 5:03 am by Rocky
» Interior Ministry reveals motives behind killing of "al-Baghdadi family" in Anbar
Today at 5:00 am by Rocky
» The new tax law...will it push Iraqi factories to export their goods and "fight" the local market?
Today at 4:59 am by Rocky
» To keep them away from appointments.. Including private sector workers in a share of residential com
Today at 4:58 am by Rocky
» A new jump in the dollar price.. approaching the 155 threshold in the Iraqi markets
Today at 4:56 am by Rocky
» Health launches electronic application link for higher health institutes
Today at 4:54 am by Rocky
» Alsumaria News opens one of the biggest files of public money theft.. Who is the Interior Ministry o
Today at 4:53 am by Rocky
» utube 10/5/24 MM&C Iraqi Dinar Update - Iraq Dinar News -World Bank - Report - Central Bank Govern
Yesterday at 9:56 am by Rocky
» utube 10/3/24 MM&C Iraq Update-Iraq Securities Exchange- Transform Iraq-Export Oil - Federal Co
Yesterday at 5:53 am by Rocky
» MM&C 10/3/24 Central Bank comments on preparing the budget for next year
Yesterday at 5:52 am by Rocky
» MM&C 10/3/24 World Bank: Iraq has made progress in improving the business environment, making it glo
Yesterday at 5:52 am by Rocky
» Commission: Kurdistan elections will include international and local monitoring
Yesterday at 5:45 am by Rocky
» Swiss Embassy in Baghdad reopens after 33 years of closure
Yesterday at 5:43 am by Rocky
» Rafidain counts the number of government departments that have activated the electronic collection s
Yesterday at 5:39 am by Rocky
» Parliamentary demands to review all agreements with Jordan
Yesterday at 5:37 am by Rocky
» This is the date for the launch of the seventh batch of social assistance
Yesterday at 5:35 am by Rocky
» Trade reassures citizens: We have food reserves sufficient for a whole year
Yesterday at 5:33 am by Rocky
» Baghdad.. The dollar records 154,250 dinars for every hundred dollars
Yesterday at 5:32 am by Rocky
» Dhi Qar.. Implementation of an arrest warrant against four suspects in the Real Estate Registration
Yesterday at 5:31 am by Rocky
» Parliament receives draft law to cancel economic privileges with Jordan
Yesterday at 5:28 am by Rocky
» Kurdish comment on the possibility of an armed confrontation between parties before the elections in
Yesterday at 5:25 am by Rocky
» Why have the salaries of the region's employees not been localized yet? A Kurdish politician explain
Yesterday at 5:23 am by Rocky
» Dollar prices continue to soar in Iraqi markets
Yesterday at 5:22 am by Rocky
» Intensive calls for comprehensive reform at Baghdad International Airport amid deteriorating service
Yesterday at 5:20 am by Rocky
» Iraqi government condemns “Tulkarm crime”: International community’s silence fuels Israeli aggressio
Yesterday at 5:18 am by Rocky
» “Hidden Costs”: How do 140 days of holidays affect the economy and daily life?
Yesterday at 5:17 am by Rocky
» Parliamentary work details the most important laws it is working to legislate
Yesterday at 5:16 am by Rocky
» New crisis hits Iraqi real estate market after 100% tax
Yesterday at 5:15 am by Rocky
» Labor sets date for launching seventh batch of social assistance
Yesterday at 5:14 am by Rocky
» Ports deny the existence of an oil spill at the confluence of territorial waters (Iraq-Kuwait-Iran).
Yesterday at 5:13 am by Rocky
» MP dismisses the person closest to the Coordination to assume the presidency of Parliament
Yesterday at 5:11 am by Rocky
» Economist: Oil prices could rise to $200 if war expands
Yesterday at 5:09 am by Rocky
» Parliamentary work: We seek to legislate laws that guarantee union freedom
Yesterday at 5:08 am by Rocky
» Parliamentary Finance clarifies to "Alsumaria News" the legality of imposing taxes on citizens and s
Yesterday at 5:06 am by Rocky
» Trump's advisor speaks to Sumaria about the possibility of dragging Iraq into war
Yesterday at 5:03 am by Rocky
» Morning list of dollar exchange rates against the dinar in Iraq
Yesterday at 5:02 am by Rocky
» Kuwaiti official: Our relationship with Iraq has been integrated for 400 years and the border issue
Yesterday at 5:00 am by Rocky
» Parliamentary Planning: Population census will include counting furniture inside homes
Yesterday at 4:59 am by Rocky
» Parliamentary demand to include the Commission Law on the Parliament’s agenda House of Representativ
Yesterday at 4:58 am by Rocky
» Dominican Republic Plans to Start Deporting up to 10,000 Haitians per Week
Fri Oct 04, 2024 11:13 am by Bama Diva
» Dozens of Meat Processing Plants Expected to Shut Down Under New EPA Rules
Fri Oct 04, 2024 10:06 am by Bama Diva
» Biden-Harris administration blasted for running out of money to deal with Hurricane Helene after blo
Fri Oct 04, 2024 9:16 am by Bama Diva
» Fake Amazon sites everywhere
Fri Oct 04, 2024 9:02 am by Bama Diva
» utube 10/1/24 MM&C Iraq Dinar News - Iraqi Stock Exchange - Private Sector - Water - Infrastructure
Fri Oct 04, 2024 6:14 am by Rocky
» The dinar collapses against the dollar.. Is the specter of 1600 looming on the horizon?
Fri Oct 04, 2024 5:59 am by Rocky
» Baghdad International Airport: Why is it unable to compete with regional airports?
Fri Oct 04, 2024 5:57 am by Rocky
» Nineveh reveals projects worth billions that have been stalled for 12 years
Fri Oct 04, 2024 5:56 am by Rocky
» Iraq calls for protecting oil routes in the Arabian Gulf
Fri Oct 04, 2024 5:55 am by Rocky
» State of Law Leader: America Has No Desire to Leave Iraq
Fri Oct 04, 2024 5:53 am by Rocky