This year is the 70th anniversary of the 1944 Bretton Woods Conference, which established the IMF and the post-war international monetary regime. Although parts of that initial regime have disappeared, e.g. the pegged, but adjustable, exchange rate system, much remains. There remain two main weaknesses.
First it is based on a single hegemonic currency, the US dollar. US policy is, of course, related solely to national US interests. When such a hegemon is a net creditor (as with Germany in the Eurozone), such a system can have a deflationary bias, and vice versa when the hegemon is a net debtor.
Second, the Bretton Wood system is asymmetric. Debtors have to adjust. Creditors do not. The IMF has no grip on large creditor countries.
But net creditor account surpluses imply net capital outflows. The realised yields on such foreign investment has often been disappointing, (Germany/China). Can policy makers help to restore balance by targeting (short-term) capital flows, rather than by trying to pressurise surplus countries to expand? The climate of ideas is changing. It could be done by macro-prudential instruments, e.g. changing RWAs. But needs more thought.
Finally, the pattern of current account imbalances may be about to change, (Japan has already swung around). China, Germany and oil producers have been in surplus, with USA as the main deficit country. But two main factors
(1) Energy
(2) Demography
may change all that. In future (after 2020) the North (in Asia, Europe and North America) will be aging and moving into current account deficit. In contrast the South (Asia, Africa and South America) will be growing more rapidly and in current account surplus.
Where does that leave Malaysia?