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Policy Papers

International Monetary System and Global Financial Cycles
Paolo Baffi Lecture

Rey, H.

This lecture describes how the current international monetary system work. The dollar is the hegemonic currency, the United States plays the role of a world banker and insurer, there are global financial cycles that affect domestic financial systems, even for countries who have floating exchange rate regimes. In such a world we should have macroprudential policies as sophisticated as inflation targeting policies. The international monetary system is not stable as we may be facing a new Triffin dilemma. I speculate that world powers could compete using increasingly sophisticated cross-border payment technologies to expand the network of countries under their monetary and financial influence. This could have profound geopolitical implications.

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*ERC Advanced Grant INFIMOP

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