Toward a World Central Bank.

The 10th Santa Colomba Conference, held in that Italian city in late June, examined the question: "Does the Global Economy Need a Global Currency?" According to former Federal Reserve Chairman Paul Volcker, the answer is a resounding "Yes"--a view shared by the 15 members of the international banking elite present at that gathering.

Among those in attendance, reported the June 30th Wall Street Journal, were Jacob Frenkel, former head of the Israeli central bank; former Argentine Finance Minister Domingo Cavallo; and noted economist Steve Hanke, who is affiliated with the libertarian Cato Institute. The event was convened by Nobel Prize-winning economist Robert Mundell.

"The first [Santa Colomba] conference was held in 1971, three weeks after President Nixon's August 15th announcement severing the link between the dollar and gold," recounted the Journal. Mundell's writings and arguments "motivated both the Reagan administration economic policies in the U.S. and the advent of the euro on [the Italian side] of the Atlantic."

Mundell's argument, briefly stated, is this: "[I]f the euro can replace the franc, mark and lira, why can't a new world currency merge the dollar, euro and yen? The euro's recent recovery against the dollar almost certainly establishes its credibility as a permanent currency.... This suggests success for the grandest reform of all, a supra-national central bank." At present, despite labor unrest and economic turmoil in the "euro-zone," notes the Journal, "few complain about the loss of 'monetary sovereignty.' World money, with a world central bank, seems a next logical step.... A world money would be an extraordinary boon to international stability."

Accordingly, "Bob Mundell has a plan, based on the euro and looking toward the year 2040. To wit, all currencies [would be] convertible into an international money, the dey [an acronym for dollar, euro, and yen] ... or perhaps the intor." An international board--that is, a global Federal Reserve--would regulate the global supply of that currency, and monetary gains from its issue would be apportioned under a quota plan administered by the IMF.