Zoellick: G20 should consider gold tie in

WASHINGTON, Nov. 8 (UPI) -- The president of the World Bank in Washington said currency exchange rates should return to a system that ties currency values to gold.

In a five-step plan for economic recovery, bank President Robert Zoellick called for "a plan to build a co-operative monetary system that reflects emerging economic conditions."

The system "is likely to need to involve the dollar, the euro, the yen, the pound and a renminbi that moves toward internationalization and then open capital account," Zoellick wrote in an article published in The Financial Times.

"The system," he wrote, "should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values."

Zoellick argued that the global economy has gone through enough change since the current "Bretton Woods II" system began in 1971 to require a fundamental overhaul.

"Changes since 1971 certainly matches those between 1945 and 1971 that prompted the shift from Bretton Woods I to II," he wrote.

Bretton Woods I used gold as a reference point and included restrictions on capital flows in between economies.