World Bank president, Robert Zoellick speaking on Monday, Sept 28, 2009, at the Paul H. Nitze School of Advanced International Studies at Johns Hopkins University, on the implications of the global economic crisis for global growth and the role of developing countries.

The global economic crisis is contributing to shifts in power relations in the world that will impact currency markets, monetary policy, trade relations and the role of developing countries, World Bank president, Robert Zoellick, said on Monday. In a speech, he said the dollar was likely to lose its favoured position as the euro and the Chinese renminbi assume bigger roles.

In a speech ahead of the annual meetings in Istanbul, Turkey of the World Bank and IMF, Zoellick said leaders should reshape the multilateral system and forge a “responsible globalization” that would encourage balanced global growth and financial stability, embrace global efforts to counter climate change, and advance opportunity for the poorest.

“The old international economic order was struggling to keep up with change before the crisis,” Zoellick told an audience at the Paul H. Nitze School of Advanced International Studies of the Johns Hopkins University, in Washington, DC. “Today’s upheaval has revealed the stark gaps and compelling needs. It is time we caught up and moved ahead.”

In the speech entitled “After the Crisis?”, Zoellick said: “Peer review of a new Framework for Strong, Sustainable and Balanced Growth agreed at last week’s G-20 Summit is a good start, but it will require a new level of international cooperation and coordination, including a new willingness to take the findings of global monitoring seriously. Peer review will need to be peer pressure.”

It was also important for the G-20 to remember those countries not at the table. “As agreed in Pittsburgh last week, the G-20 should become the premier forum for international economic cooperation among the advanced industrialized countries and rising powers. But it cannot be a stand-alone committee. Nor can it ignore the voices of the over 160 countries left outside.”

China’s strong response during the economic crisis and rapid recovery had underscored its growing influence as a stabilizing force in today’s global economy. But its leaders face challenges caused by rapid credit growth and the economy’s dependence on exports.

The United States had clearly been hit hard by the crisis. Its prospects depend on whether it will address large deficits, recover without inflation, and overhaul its financial system. The United States has a history of recovering from setbacks. “But the United States would be mistaken to take for granted the dollar’s place as the world’s predominant reserve currency,” Zoellick said. “Looking forward, there will increasingly be other options to the dollar.”

He argued that the United States and a handful of other rich nations could no longer dominate the world economy and suggested that America was losing its clout. He said that the euro provided a “respectable alternative” for financing international transactions and that there was “every reason to believe that the euro’s acceptability could grow.”

In the next 10 to 20 years, Zoellick said, the dollar will face growing competition from China’s currency, the renminbi. Though Chinese leaders have minimised their currency’s use in international transactions, largely so they could keep greater control over exchange rates, he said the renminbi would “evolve into a force in financial markets.”

The former Goldman Sachs banker who was United States trade representative and deputy secretary of state under President George W. Bush, also strayed into US domestic policy and criticised a financial regulatory proposal from the Obama administration.

“The greenback’s fortunes will depend heavily on US choices,”Zoellick said. “Will the United States resolve its debt problems without a resort to inflation? Can America establish long-term discipline over spending and its budget deficit?”

He criticised President Obama’s plan to give the Federal Reserve the responsibility for reducing “systemic risk” and to regulate institutions considered too big to fail. Saying that Congress had become uneasy about the Fed’s exercise of emergency powers to bail out financial institutions and prop up credit markets, Zoellick argued that the Treasury rather than the Fed should get more power because the Treasury was more accountable to Congress.

The crisis has brought to the attention of lawmakers the significant role played by central banks. Central banks performed well once the crisis hit but their role in the build-up was less convincing. “In the United States, it will be difficult to vest the independent and powerful technocrats at the Federal Reserve with more authority,” said Zoellick. “My reading of recent crisis management is that the Treasury Department needed greater authority to pull together a bevy of different regulators. Moreover, the Treasury is an Executive department, and therefore Congress and the public can more directly oversee how it uses any added authority.”

Developing countries had already been on the rise before the crisis and their position has been further strengthened because of it. Their growing share of the world economy was a positive development. “Looking beyond, a more balanced and inclusive growth model for the world would benefit from multiple poles of growth,” Zoellick said.“With investments in infrastructure, people, and private businesses, countries in Latin America, Asia, and the broader Middle East could contribute to a “New Normal” for the world economy.”

CNBC's Larry Kudlow interviews Robert Zoellick: