The World Traders’ Tacitus Lecture was inaugurated in 1988 and is believed to be the best attended event of its type in the City. This year’s topic was A New International Monetary System in a New World Order. The presenter was Sir Paul Tucker, economist and banker, formerly the Deputy Governor of the Bank of England, with responsibility for financial stability. Following the breakdown of the Bretton Woods agreement in the 1970s, the US Dollar became the principal reserve currency, with the US as the World’s banker and therefore exerting considerable clout over a range of issues. To enable this to happen, the US had to run deficits so that the rest of the world could have access to dollars to finance trade. With emerging economies, such as China producing massive trade surpluses, should this international burden be shared, and what are the choices. Sir Paul set out four scenarios for the medium term: all with significant consequences for nations and the international order. Two choices would allow a continuation of life as we know it, but one choice would lead to protectionism and retrenchment.
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