London, Nov. 8: Leading economies should consider adopting a modified global gold standard to guide currency rates, the World Bank president, Mr Robert Zoellick, said on Monday in a surprise proposal before a potentially acrimonious G20 summit.
Writing in the Financial Times, Mr Zoellick called for a “Bretton Woods II” system of floating currencies as a successor to the Bretton Woods fixed-exchange rate regime that broke down in the early 1970s.
The former US trade representative, who served in several Republican administrations, said such a move “is likely to need to involve the dollar, the euro, the yen, the pound and (a yuan) that moves toward internationalisation and then an open capital account.
“The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values,” he added.
“Going forward that would be something that we could look toward, but it’s not going to happen within a short period of time,” said Mr Ong Yi Ling, analyst at Phillip Futures in Singapore.
Gold hit a high of $1,398.35 an ounce in early trade on Monday on concerns of a continued weakening dollar trend after the US Federal Reserve last week acted to resume buying Treasuries.
That policy has fed acrimony among leading economies in the G20 in the run-up to their summit in Seoul on Wednesday and Thursday.