By Vestnik Kavkaza
Russian Prime Minister Dmitry Medvedev will arrive in Switzerland tomorrow where he will participate in the annual session of the World Economic Forum in Davos. Development of the world economy, providing macroeconomic stability, and improvement of the monetary and financial system stability will be discussed at the forum.
The last problem was considered in details last week in Moscow at the Gaidar Forum 2013 where economists discussed the future of global currencies, prospects for regional reserve currencies, regulation of local, regional, and global banks, and tried to understand whether a reform of international financial institutes is necessary.
Armen Darbinyan, rector of the Russian-Armenian University, the former Primer and the economy minister of Armenia thinks that a resolution of the international financial crisis through the formation of a new world reserve currency is premature.
“The first thesis is that a unipolar world has proved to be unsustainable. A single currency as part of the unipolar world, therefore also in my opinion has become obsolete. One should not be afraid of competitive currency systems, one should not fear bi- or even tri-polar global currency systems. Establishing a unipolar global monetary system means creating risks and destroy competitiveness as a possible source for the development of the world economy.
The second point is that creating a single currency today on the basis of global currencies such as the dollar, the euro and perhaps even the yen in the future can mean automatically pitting the developed world against the developing countries. Given the closed character of the Chinese currency, which today serves the second-world economy, I think such a statement would cause conflicts rather than help resolve global problems, especially since the Chinese currency, as well as other currencies, is today a powerful source of economic development. The monetary policy, conducted in China, is one of the components of the Chinese economic miracle.
Thirdly, the competitiveness of world currencies has not ceased to exist yet and will definitely manifest itself clearly in the future. Today, world currencies of the so-called second "tier" such as the British pound, the Swiss franc, the Canadian and Australian dollars - provide a proper level of competition. If we look at the development tendencies of recent years, of the three to five years in Switzerland for instance, we'll see that during the global crisis, the Swiss reserves, in my opinion, increased 6-fold. It even outstripped Russia in reserves. In this regard one should neither be afraid of the intervention proclaimed by the new Japanese government, which has won with the slogan: "Strong Japan - weak yen."
Fourthly, the integrating potential of today's global currency is far from being exhausted. The US will become the basis of a new unified currency of the economies of the U.S, Canada and Mexico. These considerations are not simply theoretical calculations, in fact there is actual preparation for it. The US dollar will become the basis for further development in the direction of integration of the world economy in the Americas. The unifying potential of the euro has not been exhausted yet either. One should not be afraid of a default. Poland, for example, is not waiting its turn to join the eurozone. In 2013 it will happen. The multi-directionality of these forces should be seen as a source of potential.
Fifthly, every currency of the second "reserve" circle in itself plays the role of a powerful incentive to the economy. Again, the examples of Japan, Switzerland and of China are themselves more positive than negative. The development of the Chinese economy in recent years was more of a positive factor for the world economy, despite all contradictions it has with the U.S. economy, for example.
The sixth point is that the level of globalization in the modern world is greatly exaggerated. An international company, DHL, has recently published the results of its research, which show that the degree of global integration is only 20 percent. They took into consideration such factors as economic relations, internet bandwidth, the frequency of international phone calls, the number of migrants, the number of foreign students, etc. A 20% level of global integration is not at all a level which one should fear. Moreover, it seems to me that in recent years we have become more afraid of assessing our self-identity in this globalized world. More and more we come to understand that the cultural and civilizational diversity of the contemporary world is its strength and not its weakness.”
In Russia today, Darbinyan thinks, there are enough positive factors to think positively about its global future. But there are also negative tendencies in Russia, which the government must address: “Among these tendencies, I would cite a kind of aspiration for gigantism on the world market which is not accepted very well by the world economy. First, there was the process of turning Gazprom into a global company, its market value was increased to one trillion dollars. This objective was wrong. Today, a similar gigantism is observed in the development of Rosneft. The stumbling of the pension reform, in my opinion, is also one of the negative factors. Certainly, Russia has objective difficulties and one of the biggest challenges and objective problems is a lack of integration, integration into the world, not just the world economy, but also in culture, the cultural and social space. The Public Opinion Foundation has recently published its data. 80% of the Russian population has never been abroad, only 17 % of the population know foreign languages. This, of course, is an objective indication of the difficulties that Russia is going to face, and one has to solve them, to find solutions to them. A direction towards modernization of the education system in Russia.
And certainly, a small number of domestic investors. Only 5 percent of the Russian population is involved in investing in the domestic market, which of course is a very weak indicator, an indicator of weakness, of a lack of internal confidence in the stock market and its prospects as well. But, as you know, Russia is an amazing country in terms of its appeal, and I think that the measures that are currently being undertaken, together with the far-reaching Russian soul, will bring results. It seems to me that in this regard Russia has a future.”
