A United Nations report today called for the abolishing of the U.S. dollar as the global reserve currency, and replacing it with the International Monetary Fund’s special drawing rights (SDRs).
The UN doesn't want to replace with a basket of currencies either, but only on on IMF-controlled SDR’s.
The report also said, “A new global reserve system could be created, one that no longer relies on the United States dollar as the single major reserve currency.”
Some believe the US dollar is being attacked for the purpose of exploiting the weakening economic situation in order to institute a global currency issued by the IMF.
Thursday, July 1, 2010
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1 comment:
Given the fast growing economies in Asia and Africa, the US dollar alone cannot shoulder the responsibility of being the world's reserve currency.
But in the current system, SDRs are NOT any different from using US dollars, post the Nixon shock. Today, a US dollar in possession of any foreign country is only redeemable for some tangible good or service from the US only.
However, the inclusion of a basket of currencies in the SDR system would spread the risk from the US, to include a few more robust regions like the EU and Japan. If this modified SDR system is adopted, it would definitely help in the mitigation of financial crises in the future.
Thank you.
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