Global Currency Proposed

 

 

One currency for all?

A panel at the United Nations is proposing a plan to create a global currency that would be run by the International Monetary Fund.

Several countries that feel they have been cheated by the current system, that uses the U.S. dollar as the main currency, support the plan.  Many commodities, including oil and gold, are measured in U.S. dollars. 

The U.N. panel made up of economists is led by US economist Joseph Stiglitz and focused a lot of their attention on helping developing countries during the global recession. 

“Developing countries are lending the United States trillions of dollars at almost zero interest rates when they have huge needs themselves,” Stiglitz noted during his presentation.  “It’s indicative of the nature of the problem. It’s a net transfer, in a sense, to the United States, a form of foreign aid.” Thus, the United States benefits greatly by having their currency at the top. 

The managing director of the International Monetary Fund (IMF) said the talks about replacing the dollar was reasonable and would likely be brought up in the next few months.  The IMF primarily helps countries stabilize their financial systems through lending programs, economic surveillance, and technical assistance. 

Russia and China support the idea of moving away from the U.S. dollar.  China has been hit hard by the recent economic crisis in the United States since they have a big stake in the U.S. market. 

“If I was a Chinese central bank, I would be worried about all the dollars I was holding and I’d be happy to have an international institution converting them for me,” said economics professor, David Laidier, from the University of Western Ontario, to the Globe and Mail. 

A global currency would also make it easier for China to attract investors, since the assets would not be priced in that country’s currency, the Yuan. 

But the United States and European countries are dismissing the idea.  Treasury Secretary defended the dollar as a key global reserve currency.

“I think the dollar remains the world’s standard reserve currency, I think that’s likely to continue for a long period of time,” Geithner told the AFP.  And during a news conference on Tuesday, President Obama said he did not see a need for a global currency.

Many economists say a changeover to a global currency would likely not occur within a short turnaround and could take years to discuss and implement. 

The global currency issue is expected to be brought up at the summit of the G20 club of developed and emerging countries on April 2^nd. 

Sources: breitbart.com, reportonbusiness.com, AFP, Globe and Mail