Nation viewed as key player in reformed global structure

Regardless of China's input then and now, Kishore Mahbubani, a former Singapore diplomat and the author of Has China Won?, a new book that addresses the relationship between the US and China, said questions were being asked about the Bretton Woods global architecture well before the current health crisis.

"The World Bank needs to ask itself does it still want to insist on the rule that to become its head you must be an American, and similarly that to become head of the IMF must you be a European?" he said.

"That may have been a viable rule in 1940s and '50s, when the US and Europe combined comprised a great majority of the world's economy. However, now economic power has shifted, and if you don't make the rest of the world stakeholders, then these countries will just turn away. And it's not in the interest of the US and Europe to see the world turning away from the IMF and the World Bank."

The Bretton Woods system has seen a number of major shocks and reforms.

In 1971, US President Richard Nixon suddenly abandoned the dollar's convertibility into gold, because the US no longer had enough gold to cover the dollars in circulation.

The post-war fixed exchange rate system was based on this convertibility. The solution was to re-fix currencies to a devalued dollar.

In an increasingly globalized world, the financial system has become reliant on the dollar as a global reserve currency, and the pandemic has seen a retreat to the dollar, with the US still regarded as a lender of last resort.

George Magnus, a research associate at Oxford University's China Centre and at the School of Oriental and African Studies in London, believes this is unsustainable and that the Bretton Woods structure needs a 21st century makeover.

"It's not good that the US Federal Reserve is called on, crisis after crisis, to be a global lender of last resort, when its principal mandate is domestic," he said.

"Nor is it good that there's an insatiable demand for US dollar funding every time there's a crisis, especially in emerging markets, where capital is just hemorrhaging in at the moment."

Sun Mingchun, chief economist at Haitong International Securities, a securities company and investment bank based in Hong Kong, said the current system could suddenly reach a crisis point where it was no longer able to cope.

"It is perhaps too early to foresee such a scenario, although the lack of monetary policy discipline in major Western central banks in reaction to crisis has created lots of worries about the side effects of recent massive liquidity injection," he said.

"I am afraid that at some point in the not very distant future, the market will vote by its feet in the foreign exchange market."

Pettis, also author of Trade Wars Are Class Wars: How Rising Inequality Distorts The Global Economy and Threatens International Peace, believes the US can no longer bear the huge economic cost of acting as the world's central bank.

"While there may be a geopolitical advantage, it comes at an enormous economic cost. I think the coronavirus pandemic will only accelerate a process that began last August in the US Congress to force other countries to reduce their usage of the US dollar," he said.

"In the end, I suspect that over the next decade the US will move unilaterally to reduce global use of the dollar by taxing foreign use of it."

Shan Saeed, chief economist at IQI Global, an investment company based in Kuala Lumpur, Malaysia, believes the current system no longer acts in the interest of many countries.