The Defect And Evolution Of The International Monetary System

The current international monetary system is actually Dollar Standard System, which has a close link with the outbreak and spread of sub-prime crisis. It is meaningful to study the defects and reforms of Dollar Standard System from the perspective of the causes of this financial crisis. First, this paper makes a theoretical analysis of Dollar Standard System's defects and the mechanism how it led to international financial crisis. In center-periphery structure, the imbalance of world economy resulting from dollar hegemony is the origin of crisis, and unreasonable policies and missing of financial regulation accelerate the crisis. Then, I make an empirical study to verify the operating mechanism of Dollar Standard System by Co-integration analysis and Granger causality test, and further explain it's continuous. In view of the defects, I propose the idea and specific measures of establishing a multiple international monetary system. Finally, I summary the points of my paper and put forward some policy recommendations for China. The innovations of my study lie in a close combination of Dollar Standard System and international financial crisis; an explicit definition and empirical test of the operating mechanism; a comprehensive analysis of the feasibility of current reform programs; raising relatively reasonable measures.