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Measuring Gold Currency Movements

Measuring Gold Currency Movements

World Bank chief Robert Zoellick called on the world economic leaders to consider the use of gold in the monetary system as a measure of the currency movements.

He made ​​the proposal because of fear of 'currency war' in a letter published in the Financial Times.

Zoellick said the system should be involved in dollars, euros, yen, pound and the renminbi is now traded internationally.

Measuring Gold Currency Movements

"This system may also consider the use of gold as an international reference for relevant market expectations of inflation, deflation and the future value of money," he added.

United States (U.S.) is increasingly being consistently criticized China for renminbi to depreciate in order to take advantage in export markets.

Following the criticism, China hit back with a print of U.S. $ 600 billion (RM1.8 trillion) of new money while claiming to give the U.S. a competitive advantage.

"If the domestic policy is optimal policy for the U.S., but at the same time it is not the optimal policy for the world, it may bring a lot of negative effects on the world," according to the Central Bank of China, Zhou Xiaochuan.

China expressed concern that the U.S. Federal Reserve monetary policy will reduce the value of the dollar, causing the country's exports declined.

As a result, China urged the monitoring of movements of the U.S. dollar during the G20 meeting in Seoul this week.

Gold standard marginalized by former U.S. President Richard Nixon in 1971 as the dollar fell sharply against gold.

Gold is believed to help deal with inflation, but it is not allowed for flexible monetary policy, which most economists claimed that it was necessary in dealing with economic shocks. - AFP

Measuring Gold Currency Movements