| The subprime mortgage crisis in2007led to a wide financial crisis spreading from U.S.to the whole world, which turn to be the biggest economy crisis since the’Great Depression’. A conclusion has been realized when the whole world looked back that one of the most important conditions in this crisis is the current international monetary system called Jamaica System based on U.S. dollar as reserve, which promoted the development and aggravation of this crisis. The prosperity and decline of gold currency standard system and Bretton woods system finally led to the establishment of Jamaica System in agreement. Under Jamaica System, the U.S.dollar is the main reserve currency which is also a sovereign currency. This situation results in a paradox between the balance of payment of the U.S. and the demand of currency to the whole world. Also the floating exchange rates bring more risks in this system, together with the lack of supervision and control lead to a bigger number of economy crisis. Among these solutions of reforming the international monetary system, some shall never be taken because of their insurmountable defects like rebuilding the gold standard system or the Bretton Woods system. And the multi reserve currencies can’t solve the problem completely. To turn this situation around, we shall find a path to reform the international monetary system. As the Triffin Dilemma implied, any sovereign reserve currency shall fall into the paradox of Internal and external purpose. So super-sovereign reserve currency seems like the best way to change this situation.The Special Drawing Right distributed by IMF is considered as the most promising method to this which is paid lots of attentions. SDR was founded in the first place to improve the liquidity of the whole world. A suddenly suspension happened after the second distribution until2009. With the advantages of stability of value and easiness to be supervised, the SDR can play a role of reserve in the reformation of international monetary system which is approved in many ways. China used to propose a plan in that SDR could be a substitution of U.S. dollar which is popular in some developing countries. But its defects of lacking of credit support, unreasonably and insufficiently distribution restrict the availability. So a substitution account based on it and invented to solve these problems has attracted a lot more attention. The substitution account can be built as a found which is supported by the found and can also attract more countries by interest and flexibility. The account can distribute SDRs in the form of funds which can boost the availability of SDRs in the global market. However, there still are some weakness and political factors that put off this plan a long time late because some of the technical problem and the contradictory attitudes of some countries. These countries need to reform the monetary system to improve their domestic economic environment but won’t give up the benefits of being reserve currency issuing countries.Although we could not establish the substitution account in a shot time, this still is the only direction to reform international monetary system and possibility to be the prospective international currency. The reformers shall expand the influence of SDR by pushing forward the substitution account to bring SDR in the reserve monetary system.So it will be smart if China follow this situation and participate the reforming of international monetary system to get a better position and more benefits in the future system. We should do this by accelerating the process of internationalization of RMB, transforming and upgrading of domestic economy and financial market, pushing RMB to the reserve system to explore a better way to the development of world economy. |
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