The World Bank, best known for helping developing nations from Kenya to Pakistan combat chronic poverty, is advising euro-area members Greece and Cyprus on how to strengthen their economies in the wake of debt crises.
When the world economy heads into crisis, the international currency system often breaks down. This occurs either because debtors can’t meet their obligations, or because creditors fear they are not being repaid in sound money. The first condition exists today in the euro zone; the second is likely to emerge in the China-U.S. relationship.
The global monetary and financial system hasn’t maintained financial stability as well as the Bretton Woods system of fixed currencies and needs to be reformed, according to a Bank of England research paper.