r than saviour in the current crisis, which means that a new host is needed in curbing the chaos with the help of tremendous financial resources to back the system.
The success of the original Bretton Woods to some extent depended on the work and cooperation between Harry Dexter White and John Maynard Keynes in the US and UK treasuries respectively. It took them about three years to prepare the system which is apprehensive at present. Approximately two years has passed without a draft being proposed since the renewal of this issue in 2008. So how long it would take cannot be predicted.
Moreover the Euro zone has undergone a disaster caused by the Greek debt crisis. Europe union, especially France and Germany, are struggling to end it and re-stabilize the Euro zone. This crisis on the European doorstep whatever distracts them from the new Bretton Woods.
The previous Bretton Woods was basically achieved when 45 allies got involved in the discussion and decision making. Despite new Bretton Woods being mainly related to global financial structure, under no circumstances should those developing countries be fenced off from the conference. Most of the developing countries, also as Non-OECD members, have not been in a mess by the financial crisis due to the exclusion of mortgage markets. Nevertheless, these export-driven countries are being smashed down by the declining demand of exports in industrialized countries. As a result, this new meeting of the Bretton Woods ought to be more inclusive than the previous one and a discussion of new financial system alone is implausible.
Even if a new Bretton Woods is established, how to get around the tragic fate of the previous one deserves proper consideration. The Bretton Woods ended up floating the exchange rate because of a serious weakness, i.e. the IMF could not compel the surplus countries to change exchange rates upwards. Particularly, the base currency country the US could not devalue its currency even though it was overvalued. Thus it is crucial to choose a base currency for the new Bretton Woods system. According to the present global financial market the Euro, US Dollar or Chinese Yuan may be the alternatives. Because of the special government-driven market economy of China and its backward economic base comparing with Europe and US the chance Chinese Yuan being the base currency is slim. In March 2009, the governor of the People's Bank of China (i.e. China central bank) argued that any national currency is unsuitable to be base currency and suggested the use of IMF Special Drawing Rights as base currency. The idea that the base currency rotates between Euro and Dollar each couple of decades may be another compromise.
The exchange rate defined in the fixed rate system is another key issue. As mentioned above, the developing countries must be involved in the new Bretton Woods, like China, India, and Latin America etc. Unfortunately, to solve the problems between China and the US will be a time-consuming and complex process. Nowadays the analysis of economic problems should be included with the political clashes, particularly in the events China is involved in. Since the failure of reaching the agreement of climate change in Copenhagen, then US arms sales to Taiwan, and China-US trade and RMB exchange rate issue, the nervous tension between these two countries has plagued not only their own economies but globally. In order to keep the high-speed development, Chinese government is insisting on keeping RMB undervalued. A few days ago, President Obama required China to adop
