The Return of the Gold Standard?

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Leading economies should consider readopting a modified global gold standard to guide currency movements, said World Bank president Robert Zoellick.

Writing in the Financial Times, Zoellick said a “Bretton Woods II” system of floating currencies is needed to replace the Bretton Woods fixed-exchange rate regime that broke down in the early 1970s.

Zoellick called for a system that “is likely to need to involve the dollar, the euro, the yen, the pound and (yuan) that moves toward internationalization and then an open capital account.”

He added: “The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values.”

Gold powered to a record high at $1,398.35 an ounce on Monday, and silver hit a 30-year peak, on concerns of a continued weakening dollar trend after the Federal Reserve last week acted to resume buying Treasurys.

Source: Reuters

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