MANAGING DIRECTOR OF THE IMF: STABILIZING CURRENCY IS EXPECTED TO REDUCE CROSS-BORDER PAYMENT COSTS, BUT ALSO SHOCK EMERGING MARKET CURRENCY SOVEREIGNTY

On 30 August, the Managing Director of the International Monetary Fund (IMF), Georgieva, at the Jackson Hall annual meeting, stated that the stabilization of currencies and monetization could increase global financial liquidity, making large cross-border payments cheaper and faster; but it could also exacerbate currency substitution, capital flows and exchange rate fluctuations and weaken capital controls and monetary sovereignty. A dollar-stabilized currency could increase the global network effect of the dollar and reduce the cost of United States financing on a marginal basis, but not as a substitute for fiscal discipline. The current Jackson Hole annual global central bank conference has seen three very distinct institutional lines: the BIS is more “stable currency marginalization, currencyization deposits in the middle”; the ECB is more “central bank currency uplink”; and the IMF recognizes the real efficiency of stable currency in cross-border payments, but focuses on emerging market currency substitution and capital flows. This has a more policy meaning than simply “support or opposition to a stable currency”。