PARIS - France's finance minister said on Tuesday the post-war international monetary order needed to be reinvented or become increasingly dominated by China.
The pillars of that order, the International Monetary Fund and its sister institution the World Bank, have been controlled by the United States and Europe since their inception at the Bretton Woods conference in New Hampshire in July 1944.
But globalization, the growing populist backlash against it and the rise of big new economic powers like China are increasingly putting that order to the test.
"The Bretton Woods order as we know it has reached its limits," French Finance Minister Bruno Le Maire told a conference at the French central bank marking the 75th anniversary of the conference.
"The alternative we have is now clear – either we reinvent Bretton Woods or it risks losing relevance and eventually disappearing," he said.
Le Maire said that while Bretton Woods had defined the international economic order of the second half of the 20th century, the first part of this century may be defined by China's New Silk Road project.
The Belt and Road Initiative, as it is formally called, envisions rebuilding the old Silk Road to connect China with Asia, Europe and beyond with massive infrastructure spending largely financed by China.
"Unless we are able to reinvent Bretton Woods, The New Silk Roads might become the new world order," Le Maire said. "And Chinese standards – on state aid, on access to public procurements, on intellectual property – could become the new global standards."
IMF Acting Managing Director David Lipton said at the conference that the fund had a duty to reflect the rising power of emerging markets.
Le Maire said the reform priorities of Bretton Woods institutions should be focused on fighting climate change, curbing rising inequalities and regulating the emergence of digital giants.
He added that the arrival of a new IMF chief after Christine Lagarde's departure for the European Central Bank created an opportunity to rethink the fund's mandate while its shareholders needed to ensure it had enough resources for the next crisis. (Reporting by Leigh Thomas; Editing by Richard Chang)