##rrencies had the additional advantage that the us net investment position improved when the dollar depreciated. although the international monetary system based on the “ dollar standard ” has not been performing some of its essential functions, it is by no means clear what could replace it. all those that have been mentioned – a supranational currency like the sdr ; a tripolar system based on the dollar, the euro and an asian currency – face very substantial difficulties. underlying all this is the fact that the international monetary system that emerged after the demise of bretton woods is a “ non - system ”, driven by the revealed exchange rate preferences of the individual countries, with a very weak multilateral surveillance, despite recent attempts to strengthen it. the regime of fixed exchange rate pegs was never replaced by one of generalised free floating, but instead gave way to a hybrid system. in practice, throughout the last 35 years, the exchange rate policies of a majority of countries have been marked by widespread “ fear of floating ”, with large foreign exchange intervention. this fear is not at all surprising, since large exchange rate fluctuations driven by capital flows can be highly disruptive in a world that is increasingly integrated economically and financially 3. a broad and lively debate on the design of such tools has recently developed. see, for example, the paper by c. borio on “ implementing the macroprudential approach to financial regulation and supervision ” ( published in banque de france financial stability review, september 2009 ), the discussion paper by the bank of england ( “ the role of macroprudential policy ”, discussion paper, november 2009 ) and the report of the warwick commission on international financial reform ( the report of the second warwick commission report : in praise of unlevel playing fields, november 2009 ). see also, on these issues, i. visco, “ the global crisis : the role of policies and the international monetary system ”, cit. 4. the main challenges ahead 4. 1 correcting global imbalances and fostering sustainable growth whatever the shape of the future system, an urgent task – to be addressed as soon as the economic situation improves – is correcting existing imbalances. the fundamental macroeconomic imbalances that lay at the root of the financial crisis are not being righted by the consequent global recession. at present, the rise in us private sector saving and the sharp fall in investment, partly offset by a larger public sector deficit,

materials. this is a crucial issue for the eu, which accounts for only 0. 5 per cent of global production of these inputs. 26 see, among others, m. g. attinasi, l. boeckelmann and b. meunier, ‘ the economic costs of supply chain decoupling ’, ecb working papers, 2839, 2023 ; g. felbermayr, h. mahlkow and a. sandkamp, ‘ cutting through the value chain : the long - run effects of decoupling the east from the west ’, empirica, 50, 2023, pp. 75 - 108 ; b. javorcik, l. kitzmuller, h. schweiger and m. a. yıldırım, ‘ economic costs of friendshoring ’, the world economy, 47, 7, 2024, pp. 2871 - 2908. a. borin, m. mancini and d. taglioni, ‘ measuring exposure to risk in global value chains ’, world bank, policy research working papers, 9785, 2021. l. panon et al., ‘ inputs in distress : geoeconomic fragmentation and firms ’ sourcing ’, banca d ’ italia, questioni di economia e finanza ( occasional papers ), 861, 2024. for instance, in the case of sanctions imposed on russia following the invasion of ukraine, there are signs of a rerouting of eu sanctioned goods through specific third countries. see a. borin et al., ‘ the impact of eu sanctions on russian imports ’, voxeu, 29 may 2023. f. p. conteduca, s. giglioli, c. giordano, m. mancini and l. panon, op. cit., 2024. iea, ‘ world energy investment 2024 ’, 2024 ; f. panetta, ‘ the heat is on : challenges and opportunities of the energy transition ’, opening remarks at the g7 - iea conference on ‘ ensuring an orderly energy transition ’, rome, 16 september 2024. with better information, we can better identify and monitor vulnerabilities. many g7 public institutions, including the european commission and the us department of commerce, have developed analytical tools to map critical vulnerabilities in the availability of raw materials. 27 however, our