World Bank president Robert Zoellick has called on bickering G20 nations to bring gold back into the global monetary system as an anchor to guide currency movements.
Ahead of a Group of 20 summit this week in Seoul, Zoellick said an updated gold standard could help retool the world economy at a time of serious tensions over currencies and US monetary policy.
He said the world needed a new regime to succeed the “Bretton Woods II” system of floating currencies, which has been in place since the fixed-rate currency system linked to gold broke down in 1971.
The new system “is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi (Chinese yuan) that moves towards internationalisation and then an open capital account”, he wrote in Monday’s Financial Times.
“The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values,” Zoellick said in a commentary piece.
“Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.”
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