6 Jan 2010
Alluding to recent calls to revamp the global monetary system to reduce the dominant role of the dollar, Sarkozy said that disparities between the two currencies posed a “considerable problem.”
The prospect that companies might consider relocating some of their industrial activity to regions reliant on the dollar could not be ruled out, he said during a visit to a plant of defence electronics group
“I will bring up this problem of monetary disparities all through the year,” he said in a New Year’s speech to workers and business leaders in western France.
“If you’re producing in the euro zone and selling in the dollar zone, with a dollar that’s falling and a euro that’s rising, how are you supposed to make up for this deficit in competitiveness?”
This question needed to sit “at the centre of international debates,” he said.
France has said that the euro at $1.50 was a disaster for Europe, fuelling a broad international debate about imbalances between currencies.
The government has said Sarkozy would propose “a new international monetary organisation which better reflects today’s world” to the G20 in 2011, when France holds the G20 presidency.
The dollar has been the lynchpin of the world financial system since 1944 when the Bretton Woods conference agreed on a pegged exchange rate system with the dollar as the effective reserve currency.
Although this collapsed in 1971, when the dollar stopped being convertible into gold and gave way to the currency model of freely floating currencies, the dollar has remained the favoured international currency.
In a wide-ranging speech, Sarkozy also said government policies were protecting domestic industry in the wake of the global economic crisis to ensure that the country remained competitive.
A commitment to invest some €60bn, through funding generated by both the state and private sectors, in strategic sectors would help the euro zone’s second-biggest economy remain competitive globally, he said.
Sarkozy has previously said that the cash will be used to improve higher education, training, research and in cutting-edge economic sectors.
“Even if we hadn’t had the crisis, we would have had to invest in the potential of our universities and our research apparatus, in our industry,” he said.
“How do you want France to remain a big world power if we don’t have the best universities, if we don’t give our laboratories the means to find the medicine and technology of tomorrow,” said Sarkozy.