ABSTRACT
One of the most striking features of today’s global economy is the persistence of large payment imbalances between the United States and its creditor countries, and the apparent inadequacy of the international monetary system to promote a smooth adjustment. The world crisis has highlighted the fact that the current international monetary situation seems incapable of providing the necessary adjustment mechanism when imbalances are large and persistent. The huge size of capital markets makes financing payment imbalances much easier than in the past, and the small range of exchange rate movements is not helpful in correcting large-sized current account deficits. This situation has reached a stalemate, in view of the aim of the United States to preserve the privilege coming from its role of key currency country, while China aims to maintain its competitive advantage in the trade field and possibly avoid substantial capital losses in its dollar-denominated securities.
