| According to the definition given by the president of the International Monetary Fund (IMF), global imbalance is the phenomenon that the world's current account deficits concentrate in one country and surpluses in another few ones. Nowadays, global imbalance could be seen by the large current account deficits in America and huge surpluses in the emerging economics including Japan, China etc. After the 1990s, the problem of global imbalance arouses more and more attention. This paper combines the problem of global imbalance with the current international monetary system, and includes 4 parts.The first part of the paper elaborates the problem of global imbalance. First of all, this part introduces the definition and phenomena of global imbalance. Currently America is becoming the largest country in the world that has current account deficits. In 2005, the current account deficits of America account for 64.4% in that of the world. Meanwhile China maintains surpluses in the current account for about 14 years. In addition, as the oil price is surging, the Petroleum export States become the second-largest country who has huge current account surpluses. Global imbalance is serious. Second, this part analyses the reasons of global imbalance. In America the residents consume too much and leave little money to deposit. The Consumption habit, the slash of the tax, and the Wealth effect come from the high assets prices contribute to the increasing of the consumption and the import. The export of the American is small because the US government implements strict high-tech export control. Both the large imports and the small exports eventually lead to the current account deficits of America. In China the insufficient domestic demand and export-directed economic development strategy are the main reasons why the current account surpluses are increasing. What's more, according to the theory of the international finance, that the domestic deposit is larger than the investment is also an important reason. When consider global imbalance in the world economy, globalization and industrial shift in the whole world cause China to become the producer of export products. So China must have large current account surpluses. Finally, this part elaborates the effects of the global imbalance to America, China and the world economy. The deficits is the reason of the weak US dollar, in order to import more, the America issues too much dollar, which contribute to the surging of the stock price and housing price. At the same time, the interest rate of America is raised to attract more money investing in American financial market. Many people can't afford the high interest so that the America's subprime-mortgage crisis is broke out. The effects of global imbalance to China are obvious. It increases the foreign-exchange reserves of China which raise the risk. Additionally the central bank of China buys the U.S. dollar with the RMB which creates a vast pool of liquidity. The long-time surplus also leads to the appreciation of RMB and intensification of the trade friction between China and the America. Considering global imbalance from the point of the world economy, the structure of it is changing slightly. Furthermore, the global imbalance also leads to inflation in the whole world.The second part of the paper introduces the current international monetary system. The current international monetary system is base on the Jamaica monetary system. Whose main features are that it carry out the Gold Demonetization and increase the SDRs(Special Drawing Right) as a new international reserves currency. The Jamaica monetary system ended the Double peg of the Bretton Wood System and established the Mixed Exchange Rate System. It also has several approaches to adjust the international payment balance such as exchange rate adjustment and interest rate adjustment etc.The third part of the paper combines the problem of global imbalance with the current international monetary system. From the angle of the international monetary system; there are some reasons for the broking out and the continuing of global imbalance. First and foremost, the U.S. dollar hegemony declined the loss of the America caused by global imbalance, sometimes the America benefited from it. Second, the current exchange rate system of the emerging economies in East Asian related their domestic currencies with the U.S. dollar. So the current account surpluses increased the foreign-exchange reserves of China, which mainly invested in the American Treasury Bonds, the large amount of money supported the import of the America by paying little interest. The sustainability of the U.S. current account deficit rises. Third, IMF loaned to the country that is in financial crisis only when it observes the provision that IMF make. So the international finance environment is not stable, more and more countries endeavor to improve the export to increase the foreign-exchange reserves. Forth, financial globalization increases the financial innovation and the pace of the financial reform in developing countries. So a large amount of money from the developing countries which have current account surpluses could be invested in the world market, especially invested in the American financial market which is the largest one in the world. The money supports U.S. current account deficit. Last, the fundamental cause of the global imbalance is that the sovereign state currency acts as the international currency. The amount of the international currency must increasing as the world economy developing, in the current international monetary system the U.S. dollar is the most important international currency. So the U.S. current account deficits are the result of the developing of the world economy.Based on the above three parts, the last part conclude with some suggestions to solve global imbalance. Use the non-sovereign state currency as the international currency or developing multiplication international reserves currency could help to solve or alleviate the problem of global imbalance. |
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