Istanbul, June 2 (HNA) – Veteran Banker Bülent Şenver has proposed the establishment of a “World Central Bank” and a “World Bankers’ Union” to ensure global financial stability.
Noting that the global economic integration is accelerating in today’s world, Şenver pointed out that the global impacts of national monetary policies are becoming “increasingly evident.” He stated, “In this context, the proposal to establish a World Central Bank (WCB) to ensure global financial stability is gaining more traction.” The necessity of establishing such an institution, its potential structure, and the benefits it could provide are numerous, he said, adding:
“However, establishing a World Central Bank is a highly challenging and complex endeavour. Questions such as which countries will be shareholders, what the share ratios will be, who will make decisions, whether countries will comply with these decisions, and how the institution’s sustainability will be ensured must have answers that all countries can accept. This currently appears very difficult in practice.”
Despite these challenges, Şenver proposed the establishment of a World Central Bank (WCB), a World Banking Association (WBA) and a World Banking Supervision and Audit Board (WMAB), summarising his work on this process as follows:
“The global economy has undergone a serious integration process, especially since the end of the 20th century. With the liberalisation of capital movements, the growth of multinational companies, the increase in international trade and the interdependence of financial systems, the impact of monetary policy decisions taken in one country on other countries has reached a level that cannot be underestimated. In this context, there is a need for a World Central Bank (WCB) that can manage coordinated monetary policies worldwide and can intervene in global crises.
“The Necessity of Establishing a World Central Bank: Global Financial Crises and Lack of Coordination; The 2008 Global Financial Crisis demonstrated that central banks of different countries cannot solve global fluctuations on their own. Uncoordinated interventions have led to currency wars and imbalances in some countries.
“Additionally, Reserve Currency Imbalances; The use of the US dollar as the global reserve currency has indirectly made the monetary policies of countries outside the US dependent on the US. This situation creates structural imbalances in the international financial system.
“Furthermore, another necessity stems from Cryptocurrencies and Digitalisation; the widespread adoption of digital currencies on a global scale is weakening the influence of national monetary policies and reducing the control capacity of central banks. This development has made the need for an international monetary authority even more urgent.”
Şenver also summarised the potential structure of the World Central Bank he proposed as follows:
“Structure and Management: It could be established as part of a multinational structure similar to the United Nations or the IMF. A board of directors comprising representatives from the central banks of member countries could be envisioned.
‘Scope of Authority: It could issue global digital currency, coordinate international interest rate policies, set global inflation targets, and act as a lender of last resort in times of crisis.
’Currency: The WCB could issue a digital global currency (such as “bancor”) that could be used worldwide.”
Şenver also explained the benefits of the World Central Bank he proposed to establish as follows:
“Global Financial Stability: By creating a more stable monetary system worldwide, the impact of sudden capital movements and speculative attacks can be reduced.
“Monetary Policy Coordination: Imbalances caused by inconsistent monetary policies between countries can be minimised. Global targets for inflation and interest rates can be set, increasing predictability.
‘Transformation of the Reserve System: Countries will no longer need to hold high levels of foreign exchange reserves. This will contribute to more efficient use of resources and reduce global income inequality.
’Crisis Intervention and Trust: It will enable joint and rapid intervention in global crises. Trust in financial markets will increase and the investment environment will improve.”
Emphasising that the loss of authority by national central banks could be unacceptable for some countries, Şenver said, “There is a risk that the influence of large economies on the DMB will overshadow small countries. A digital currency and data sharing infrastructure that will operate at the global level is not yet sufficiently developed,” and continued:
“In a globalising world, the global nature of economic problems has turned the establishment of a central bank operating at an international level from an option into a necessity. Despite political and technical challenges, the World Central Bank could play an important role in building a more equitable, stable, and sustainable global financial system in the long term.”