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Euro, Dollar, Yuan Uncertainties

Scenarios on the Future of the International Monetary System


As the Euro debt crisis spreads with wide-ranging implications worldwide, a report by the World Economic Forum, developed in collaboration with Deloitte Touche Tohmatsu Limited (DTTL), published in May 2012, posits three scenarios for the international monetary system in 2030 based on possible policy choices made by the world’s three major currency areas—the Euro, Dollar, and Yuan.

The report Euro, Dollar, Yuan Uncertainties: Scenarios on the Future of the International Monetary System, says that international monetary stability is at risk due to the uncertainties surrounding the future international roles of these currencies and that the policy choices within each of these currency areas could radically alter global patterns of trade and capital movement.

The Eurozone is plagued by a weak governance structure, the United States must contend with a dim fiscal position, and China will have to resolve systemic weaknesses in its financial system if the Yuan is to rise to international significance, says the report, which offers three plausible and divergent scenarios for the international monetary system. These scenarios include reversion to regionalism, G2 balancing, and reconciling a two-speed world, each detailed in the report.

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