Dispense With IMF Ban on Gold as Exchange Rate Peg: WGC.
Tuesday June 26, 5:51 PM
NEW DELHI, June 26 Asia Pulse - The current prohibition by the International Monetary Fund [IMF] on using gold as an exchange rate peg is anachronistic and potentially damaging to some developing countries, and should be dispensed with, according to a new World Gold Council [WGC] study.
The WGC, which published an updated version of its study "The IMF and Gold", prepared by a former Bank of England and IMF official Dick Ware, suggested that for a number of countries it was sensible to incorporate gold in a currency or commodity basket, anchoring the exchange rate.
"We are not talking about a return to an all-embracing gold standard. But for some countries the use, or partial use of gold in an exchange rate peg might be beneficial," Ware said in the study.
"For some developing countries, especially where gold forms a significant part of their exports, establishing some sort of link to its price may make more sense than tracking the dollar and creating an exposure to the effects of US economic policy," he added.
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