Is the world economy safer now than it was before the financial crisis? On the positive side, financial regulation has been strengthened and governments are gradually reshaping growth models. China, for example, has recently signalled an important shift towards policies to encourage greater domestic and consumer demand. The twin sovereign and banking crises in the eurozone have forced leaders to embrace serious reforms and to strengthen the monetary union.

Yet these politically and socially costly steps could backfire if the asymmetry of the global monetary system is not addressed. The governments of the Group of 20 leading nations have identified the need to “rebalance” – including to avoid destabilising financial flows – but seem stuck. Given the low likelihood of an overhaul of global governance, it is time to consider how market solutions might advance a more balanced and robust financial system. Markets may not always converge towards a sustainable order but they can help.

Here is the problem: global markets need a large supply of safe and liquid assets comparable to US Treasuries. Central banks and sovereign wealth funds – and, increasingly, other pools of capital – need such basic investment instruments because such instruments are used to manage risks in global markets. Variety would reduce reliance on one country and financial system. In the absence of any alternative, US financial instruments are the only resort. This imbalance poses risks for the US, too, because, the value of the dollar is subject to interventions by everyone else based on considerations unrelated to conditions in America.