Wall Street Journal
September 19, 2011
A group of leading economists on Monday backed the issuance of euro bonds, not as a way of resolving the currency area's fiscal crisis, but as way of making the global monetary system more stable.
In a report published by the Centre for Economic Policy Research, the economists also recommended that swap agreements between leading central banks be made permanent, that the International Monetary Fund be allowed to borrow in the bond markets to boost its lending capacity, that foreign-exchange reserves be pooled, and said capital controls should be used to curb "excessive and volatile" investment flows to developing economies.
In the report, Emmanuel Fahri of Harvard University, Pierre-Olivier Gourinchas of the University of California, Berkeley, and Hélène Rey of the London Business School said that since the collapse of the Bretton Woods Agreement in 1971, international monetary relationships had been governed by a "nonsystem" that may have been "an aggravating factor—or even a trigger—of the financial imbalances at the root of the recent financial crisis."
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