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The World Economic Forum in Davos, Switzerland, certainly has a lot to consider, with an agenda that sets a goal of "improving the state of the world."

In recent years, a lack of cooperation on this issue has led to market distortions that have encouraged speculation and risk taking behavior. A fresh moral commitment to a new monetary regime is long overdue. While the world in 2009 is a very different place than during the 1944 conception of Bretton Woods, hard labor is now needed to effect lasting stability. As Georges Pompidou, himself an expert in this area, said: "conception is always more fun than giving birth."

The 2009 Forum agenda includes two points related to this work: "Promoting Stability in the Financial System and Reviving Global Economic Growth", and "Ensuring Effective Global, Regional and National Governance for the Long Term." The Forum's International Monetary Convention Project also maintains a "Reinventing Bretton Woods Committee." Previously, this Committee has noted that "four major areas merit attention: 1) the scope of [International Monetary] Fund activities, 2) surveillance, 3) lending, and 4) governance." Given the recent global economic turbulence, these issues are even more pressing today.

However, being too ambitious in making plans for restructuring is a risk. Bundling individual issues such as trade, currency bands, and environmental protection into a single overhaul will simply not work. Instead, what is needed now, far more than new structures and strictures, is dialogue.

While a new monetary regime may inherit the name of the old regime, the similarities should end there. The Bretton Woods agreement of 1944 was fundamentally transatlantic in outlook. In the past decade, trade has grown twice as fast as global gross domestic product. This trend poses new liquidity demands. Therefore, nations beyond transatlantic partners must be part of the solution, including holders of massive foreign reserves and sovereign funds. This is because while these funds tend to be stabilizing forces in the short run, in the long run they themselves add complexity to the challenges of liquidity.

It is also time for the United States to take leadership on this issue. As the Obama administration opens communication on many pressing global issues, one of them ought to be international monetary reform. Regular working level meetings at the deputy finance minister level should discuss these issues. Central bankers should heighten contact with banking colleagues, especially as they often come to different findings than politicians. The aim of these two tracks should be to reduce risk and encourage growth. Incentives should be created for nations to cooperate especially in times of economic crisis, rather than turning towards national interests, which so often is the case.

This dialogue should also translate into upgrading the role of the International Monetary Fund (IMF). All nations want to reduce exposure to risk. The IMF should more carefully monitor exchange rate bands and large capital movements to prevent unnecessary fluctuations. While we should never return to fixed rate bands, big future rate swings should lead to action, triggered by a warning system as agreed upon by deputy finance ministers and central bankers. Furthermore, IMF lending should be restricted to countries that play by the rules.

It is not beyond the talent of the World Economic Forum to formulate recommendations in the coming week. With new government in the United States, now is the time for a new moral commitment to "improving the state of the world."

Dr. Luke Nichter is a former staff member for the Committee on House Administration at the U.S. House of Representatives. He will be presenting his new book, Richard Nixon and Europe: Confrontation and Cooperation, 1969-1974, during 2009, and maintains the most complete collection of digitized Nixon tapes in the world on nixontapes.org.

The Atlantic Community's World Economic Forum Focus Week (Jan 22 - Jan 28)
This article is part of the Atlantic Community's World Economic Forum focus week in a 5 day run-up to the WEF Davos Conference (conference begins Wed 28 January). We are focusing on two of the most pressing aspects of the conference: the Global Economy and Climate Change.

Other articles in our WEF series:

• Yam Ki Chan: Unipolarity's Days Are Numbered
• Jordan Levine: Socioecological Innovation: an Alternative Future
• Scott E. Hartley: Political Liberalism at the Heart of International Trade
• Sam Vanderslott: Action on Climate Change Requires Global Technology Transfer
• Scott Micheal Moore: A Multidimensional Approach For a Planet in Peril
  

From the discussion on the community page we will generate a special Atlantic Memo that will be distributed to WEF organizers and to decision makers worldwide at the start of the conference. Please share your comments on the recommendations and issues raised in this article. We want to know how you think the WEF Davos Conference should approach the long-term questions raised by the global financial situation.