This article is from the archive of our partner .

China's undervalued renminbi continues to be a problem. The Chinese are displeased with the U.S.'s own recent currency manipulations. Is the solution to move back toward the gold standard? Buried in a broader op-ed on the coming G20 and international currency issues, World Bank president Robert Zoellick dropped this two-sentence bomb:

The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today.



This suggestion was only one of Zoellick's many ideas. It is, however, pretty much the only one being discussed. Love it or hate it, every financial commentator seems to have an opinion.

'The Last Thing That the World Economy Needs Right Now,' sputters economist Brad DeLong, "is another source of deflation in a financial crisis." He also takes issue with Zoellick's characterization of gold in the markets right now: "Markets are using gold as a speculative asset and a hedge. They are not using it is a medium of exchange, a unit of account, or a safe store of nominal value."

DeLong's Got a Point "Yes, the value of gold has surged," explains Business Insider's Joe Weisenthal, "but use of gold as an actual medium of exchange appears to be non-existent, and while much of the surge can be traced to loose money, there's also just the fact that gold is a small market." He also points out, though, that what Zoellick is suggesting "doesn't sound like a truly hard gold standard, but rather that the world would respect gold as the ultimate arbiter of a currency's value, as a measure of who is failing to keep their currency stable."

Like the Idea of Gold, But Not Holding My Breath "It is nice to see a role for gold floated in high places," writes analyst Mike Shedlock. But "don't expect," he continues, "any serious movement along the lines of Zoellick's suggestion until there is a major currency crisis involving the US, Japan, or Europe."

Out of Left Field Economist Tyler Cowen's only comment on the matter, thus far: "If you had asked me to bet in which year the President of the World Bank would recommend that we consider some version of a gold standard, I would have picked the wrong number."

Zoellick May Not Have Been Serious Former Goldmanite and popular finance blogger Yves Smith says that while the French, on the one hand, are quite earnestly pursuing international currency reform, she "wonder[s] whether the Zoellick op ed in the Financial Times, with his mention of gold towards the end getting all the headlines, is more intended to discomfit Team Obama than anything else." She observes that "Zoellick is a Bush appointee and has been pretty low profile till now."

Also, This Was One Point Among Many, chimes in The Economist's Ryan Avent, who says he feels "a little bad for Robert Zoellick." Though he agrees with critics that gold isn't the way forward, he points out that the Zoellick's Financial Times op-ed "mostly consists of laying out the weaknesses of the global monetary system and proposing sensible reforms for it: things like an agenda of structural reforms to reduce imbalances, a general swearing off of currency market interventions, and an effort to move emerging markets toward floating exchange rates." Regarding the part involving gold, Avent writes:

honestly, I'm not even sure what's he calling for here. Not only is this point vague, it's also the least necessary of all the things he recommends; obviously markets are very good at revealing expectations of inflation and future currency values already. It seems like he's trying to work toward a solution to the problem of the dollar's international reserve status. As nearly everyone agrees, other currencies need to play a larger role in international reserves, but it's not necessarily easy to understand how this might take place.



The Real Problems Beneath the Debate The Economist runs an article on international currency issues, explaining that right now, the Americans are blaming the Chinese, the Chinese are blaming the Americans, and everyone thinks there's something wrong with the system but isn't quite sure how to fix it. Here's why France, "which assumes the chairmanship of the G20 after the Seoul summit," and others as well are eager to make changes, according to the article:

There are three broad complaints. The first concerns the dominance of the dollar as a reserve currency and America's management of it. ... The second criticism is that the system has fostered the creation of vast foreign-exchange reserves, particularly by emerging economies. ... These huge reserves offend economic logic, since they mean poor countries, which should have abundant investment opportunities of their own, are lending cheaply to richer ones, mainly America. ... The third complaint is about the scale and volatility of capital flows. Financial crises have become more frequent in the past three decades. Many politicians argue that a financial system in which emerging economies can suffer floods of foreign capital (as now) or sudden droughts (as in 1997-98 and 2008) cannot be the best basis for long-term growth.

This article is from the archive of our partner The Wire.

We want to hear what you think about this article. Submit a letter to the editor or write to letters@theatlantic.com.