1980s and 1990s ) could be a way of making sdrs more attractive as reserve assets and expanding the sdr ’ s role as a unit of account in trade and finance. the ultimate goal would be to create the conditions for an expanded role of the sdr in the international monetary system. to jump - start this process, public authorities could undertake coordinated actions such as issuing sdr - denominated debt, helping create market infrastructures and providing legal certainty. – i believe that in order to have a chance to work in practice, such actions would need to be part of a long - term strategy supported by a strong political commitment. my understanding of the experience of the private ecu is that a key factor of its success was the link to the long - term process of european monetary integration, which provided not only a legal, economic and institutional frame of reference but also a strong political constituency. by analogy, making the sdr a credible reserve asset and unit of account for both official and private agents would probably require a commitment to eventually transform it into something more than a basket, i. e. a currency in its own right. as we know, we are still very far from having a broad consensus on such a prospect. bis central bankers ’ speeches 4. the reform of the international monetary system : the role of the g20 and of the imf to summarize, we have an international monetary system that lacks an effective mechanism for ensuring the mutual consistency of national policies. the costs of this in terms of distortions and instability are already evident, and will probably be further exacerbated as the world becomes more integrated economically and financially. on top of this, as we move toward a multipolar system we will need even greater cooperation to manage this process and contain the risk of instability. indeed, the need to review the functioning of the international monetary system was put on the g20 agenda early on after the crisis. following some bold g20 statements, there was even hope that a “ new bretton woods ” system could be shaped under the aegis of the g20. in this spirit, a group of former senior policy - makers assembled by michel camdessus, alexandre lamfalussy and tommaso padoa - schioppa ( the palais - royal initiative ) chose to emphasize in their report the great urgency of tackling the reform of the international monetary system, and proposed a number of significant and far - reaching changes in the current arrangements. but despite

fabrizio saccomanni : the global crisis and the future of the international monetary system speech by mr fabrizio saccomanni, director general of the bank of italy, at the chinese academy of social sciences, beijing, 15 april 2010. * * * the global crisis that hit the world economy since august 2007 has revived the long dormant debate about the adequacy of the institutional arrangements required to ensure stability in international economic and financial relationships on a global scale. the financial roots of the crisis have been widely analysed. here, i intend to focus more on the macroeconomic drivers. i will try to argue that they are ultimately connected to a number of long - standing features of the international monetary system such as it has evolved since the demise of the bretton woods regime. i will then review the main options available to reform the international monetary and financial system. 1. the global crisis and its macroeconomic roots there is now a broad consensus that, even though the global crisis was triggered by dysfunctions in the financial system, unbalanced global macroeconomic conditions contributed to the accumulation of large financial vulnerabilities ( visco, 2009 and 2010 ). the proximate cause of the crisis was the us housing boom, financed by an unprecedented expansion of mortgage lending. regulators ’ failure to correct the incentive distortions introduced by financial innovation can largely explain the deterioration of lending standards, the widespread use of opaque financial instruments and the excessive risk - taking on the part of many international banks. excessively easy monetary conditions contributed to encourage the rapid growth in mortgage borrowing and fed the rise in house prices. an easy monetary policy in the us and japan – and, to a lesser extent, in the euro area – translated into a loose global monetary stance. very low interest rates in main financial centers encouraged capital flows to economies with higher interest rates, which were induced to ease policy in turn, in order to avoid an excessive currency appreciation. countries that pegged their exchange rate to the dollar effectively adopted the us monetary policy stance, and absorbed capital inflows by accumulating large official reserves. the investment of official reserves in us treasury securities financed the growing us current account deficit and, at the same time, contributed to keep treasury bond yields low. investors turned increasingly toward riskier assets in their “ search for yield ”, leading to a compression of risk premia on a broad range of financial assets, from equities to corporate and sovereign bonds, thereby boosting asset