Recently we ran a blog article featuring the comments of Bank for International Settlements General Manager Jaime Caruana in which he says it may be time for new global "rules of the game". Rules of the game is a term used by central bankers to describe the fundamental rules used to govern the international monetary system. If someone is calling for new "rules of the game" that means they are calling for monetary system change which is what we follow here on the blog.
A big thank you to a reader who sent me this link to an article in the Economic Times ! (an Indian based publication) This article is about comments from Raghuram Rajan who is the head of the central bank for India (Reserve Bank of India). He also says it may be time for new rules of the game. Keep in mind that Jim Rickards has long predicted we would see changes to the rules of the game so these articles are very supportive of his forecast in that regard. Below are some quotes from the article and then an added comment.
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Multilateral institutions like the IMF need to re-examine "rules of the game" but central banks should not ignore international responsibilities despite their domestic mandates, RBI GovernorRaghuram Rajan has said.
Rajan, in his address to the Economic Club of New York here yesterday, made a strong case for the IMF to analyse each new unconventional monetary policy, including sustained unidirectional exchange rate intervention.
Rajan said based on their effects and the agreed rules of the game, the IMF should declare them "in or out-of-bounds."
"We also need better international safety nets. And each one of us has to work hard in our own countries to develop a consensus for free trade, open markets and responsible global citizenry," he said.
"If we can achieve all this even as recent economic events make us more parochial and inward-looking, we will truly have set the stage for the strong sustainable growth we all desperately need," the RBI Governor said.
Rajan stressed that central banks should not ignore international responsibilities despite their domestic mandates.
"The bottom line is that multilateral institutions like the IMF should re-examine the 'rules of the game' for responsible policy and develop a consensus around new ones. No matter what a central bank's domestic mandate, international responsibilities should not be ignored," he said. "
"If we can achieve all this even as recent economic events make us more parochial and inward-looking, we will truly have set the stage for the strong sustainable growth we all desperately need," the RBI Governor said.
Rajan stressed that central banks should not ignore international responsibilities despite their domestic mandates.
"The bottom line is that multilateral institutions like the IMF should re-examine the 'rules of the game' for responsible policy and develop a consensus around new ones. No matter what a central bank's domestic mandate, international responsibilities should not be ignored," he said. "
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My added comment:
Please note how similar these comments are to the ones made in the recent speech at the IMF spring meeting by the BIS General Manager. This suggests there is a growing consensus for changes to be made that give the IMF more power. Please also note that this is the head of the central bank of India (one of the BRICS nations) calling for more authority for the IMF. Keep this in mind when you see articles that suggest the BRICS nations are wanting to leave the IMF or have given up on it.
We don't yet have another major global financial crisis, but we already see calls for "new rules of the game" showing up. This suggests that if we do get another major crisis like Jim Rickards expects, we will most certainly see new "rules of the game" setup to move forward and the the IMF will be in the center of that process.
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