Reforming the International Monetary System: Comments on Jane D’Arista

n this volume, authors make proposals as to how the international monetary system should be reformed, and what role they see for the IMF in addressing global imbalances in the future. As Mark Allen has already provided comments on Ariel Buira’s and Martín Abeles’ proposals in his contribution to this volume, I will limit my comments to the proposals put forward by Jane D’Arista and John Williamson. Jane D’Arista calls for a “true international standard ” in the interna-tional financial system, pointing out that the current system is not desirable as it is causing capital to flow from poor to rich countries. The source of this problem, she claims, is the US dollar being the global currency, as such a system requires emerging economies to hold the dollar and, consequently, finance the US external debt. She proposes new “closed-end funds for emerging market investment, ” by creating a new institutional framework under the Bretton-Woods umbrella. Such funds would “redirect external savings back into the economies of the countries that own them, ” to finance their own development strategies that “increase demand and income more equitably, ” and “reduce depend-ence on exports for growth.” John Williamson claims that such a system has “zero chance of adoption, ” because countries would have to give up too much of their national sovereignty. At the same time, he stresses that the current global exchange rate arrangement is unfit to solve the global imbalances problem. He proposes a “more balanced international financial system,”