Tuesday, October 6, 2009

UN: New Global Reserve Currency

U.S. Dollar Reserve Currency

Saying that the U.S. dollar as the global reserve currency has empowered America to build up their huge trade deficit, UN undersecretary-general for economic and social affairs, Sha Zukang, said "Greater use of a truly global reserve currency, such as the IMF's special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes."

Zukank added, "Important progress in managing imbalances can be made by reducing the reserve currency country's 'privilege' to run external deficits in order to provide international liquidity."

SDRs are used for IMF transactions, and currently base their value on a basket of four currencies: the U.S. dollar, pound, yen and euro.

There is mounting pressure for the U.S. dollar to play a lesser role as the reserve currency of choice around the world, and a number of talks have gone on on how to go about that.

U.S. Dollar Reserve Currency

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