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UNCTAD wants new currency to replace greenback The buck stops here! |
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09/09/2009 |
| The United Nations Conference on Trade and Development (UNCTAD) has called for reducing the role of the dollar in world trade and establishing a new currency to protect emerging markets.
UN members-countries should agree on the creation of a global reserve bank to issue the currency and to monitor the national exchange rates of its members, an UNCTAD report said.
India, China, Brazil and Russia this year called for replacing the greenback as the main reserve currency after the US’ financial crisis affected the entire global economic system.
China preferred the adoption of the International Monetary Fund’s special drawing rights (SDRs).
"There’s a much better chance of achieving a stable pattern of exchange rates in a multilaterally-agreed framework for exchange rate management," Mr Heiner Flassbeck, co-author of the report and a UNCTAD Director, underscored.
"An initiative equivalent to Bretton Woods or the European Monetary System is needed." The 1944 Bretton Woods agreement created the modern global economic system and institutions, including the IMF and World Bank.
While it would be desirable to strengthen SDRs, a unit of account based on a basket of currencies, it wouldn’t be enough to aid emerging markets most in need of liquidity, he felt.
Emerging-market countries are underrepre-sented at the IMF, hindering the effectiveness of enhanced SDR allocations, the UN pointed out. |
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