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In an article published today by O Estado de Sao Paulo, Joseph Stiglitz says that the crisis opens field for a new currency and that the system based on the dollar is falling to pieces.
Stiglitz says Brazil has space of maneuver in the monetary politics due its policy of high interests. Speaking in the Conferences of the Estoril, Stiglitz said that the Country is in capable of stimulating the economic growth by dropping interest rates. "A great advantage that Brazil has, curiously, is that the Central bank was excessively restrictive its monetary policy. One of the advantages to have high taxes of interest is that you can lowert them". In contrast, Europe and the United States do not have this possibility: "When it is arrives at zero, is has nowhere to go. Therefore, Brazil has space to maneuver in the monetary policy while the United States and the Europe do not" According to Stiglitz, Brazil has a privileged situation relative to the other countries because it can use exports as an impulse to leave the crisis.
"Brazil is one of the few cases where the recovery depends in some degree on the resumption of exports. But Brazil is a economy of great dimensions and exports have a relative weight."
Stiglitz believes that the crisis opens the way for the sprouting of a new international currency, with a global central bank. The proposal was formulated by the Chinese authorities. "The system based on the dollar is falling to pieces. I am the president of the commission of United Nations for the reform of the financial system and we are arguing the mechanisms through which this can happen."
He also said that the destruction of the subprime and derivatives market was a test of the idea that the market can regulate itself, and that it was a mistake. According to Stiglitz, another idea that did not work was of the economic darwinism: "They believed that there would be a natural selection, that the fittest would survive, but that was not what happen with American banks.
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