The world needs a restart of the financial order

The 1971 Nixon Shock fundamentally transformed the global economy by ending the dollar’s convertibility to gold, ushering in an era of fiat currency without a stable anchor. William White, a former senior economist at the Bank for International Settlements, examines how this shift enabled a global system of persistent monetary mismanagement. While the US dollar remains the central pillar of international finance, global complicity—driven by nations pegging their currencies to the dollar to preserve export competitiveness—has fueled excessive credit and debt growth. This reliance on fiat money creates recurring boom-bust cycles and systemic fragility. Addressing these imbalances requires radical structural changes, such as implementing "narrow banking" to separate money creation from private credit. However, political inertia and the fear of devaluing existing financial assets currently prevent the necessary transition toward an orderly, more stable monetary framework.