Sir Nigel's new world order

As a civil servant of Her Majesty's Treasury who represented Britain in the G-7 and the IMF,Sir Nigel Wicksexperienced the travails of international economic policymaking firsthand yet always remained diplomatically circumspect. But now that he is out of the government and serving as deputy chairman of Euroclear, he can be, shall we say, more forthcoming.

Indeed, his untrammeled views are likely to rile his former Treasury colleagues. Sir Nigel contends that global policymaking institutions are increasingly unrepresentative and ineffective because they give Europe too much say and China too little. For starters, he recommends that the G-7 be shrunk to the G-4 -- the U.S., the Euro area, Japan and China -- and that this group be the forum for discussing exchange rate and payments imbalances.

Under Sir Nigel's proposal, put forth in a new book, Britain's chancellor, Gordon Brown, would lose his G-7 seat and Europe's representation would be reduced from three -- France, Germany and the U.K. -- to one. He argues that his G-4 would embrace the four currencies that drive the global economy and be manageable enough to be effective. "The minimum winning coalition is the four that really count," he explains.

Sir Nigel and his co-authors -- Jeffrey Shafer, a former Clinton administration Treasury official who is now vice chairman of Citigroup Global Markets; Peter Kenen, an economist at Princeton University; and Charles Wyplosz, an economics professor at the Graduate Institute of International Studies in Geneva -- envision a G-4 backed by a broader Council for International Financial and Economic Cooperation that would include finance ministers from 15 major countries as well as the heads of the IMF, World Bank, World Trade Organization and U.N. They would deal with everything from developing-country debt to banking supervision.

Sir Nigel acknowledges that his new book -- International Economic and Financial Cooperation: New Issues, New Actors, New Responses, available from the London-based Centre for Economic Policy Research -- isn't likely to find a warm reception in European capitals. But he insists that "the present institutional balance is unsustainable. Sensible policymakers should recognize that."