GAO Haihong, Director, Research Center for International Finance, Institute of World Economics and Politics, Chinese Academy of Social Sciences

The reshaping of the future Bretton Woods system is very important in three aspects: first, currency; second, institutions; third, governance..

These three key points were designed in terms of the monetary system and institutions when the Bretton Woods system was established 80 years ago. However, times are changing, and new situations are constantly emerging, including geopolitical tensions, the prevalence of protectionism at the national level, and tit-for-tat sanctions, the result of which is that there is no final winner. When designing a new financial architecture, this is a problem that must be considered.

Geopolitical tensions make everyone worry about more risks, not just currency or financial risks, but country risks that traditional tools cannot solve, which will affect both payment currencies and reserve currencies.

Establishing an international financial safety net requires closer international cooperation, but multilateral cooperation is not top-down but bottom-up. However, the reforms made by the IMF last year did not achieve the expected results because reaching consensus requires negotiation, and sometimes negotiations are difficult to reach a consensus.

We need to have currency swaps, which are very important at the level of the international financial safety net. The Federal Reserve should play the role of the ultimate lender because the US dollar market is the largest market in the world; if there are problems in the US dollar market, its spillover effect is very strong. Therefore, China has signed more than forty currency swap agreements, and the currency swap mechanism is very useful in times of crisis.