U.N. panel says world should ditch dollar

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Rob Z's picture
Rob Z
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Joined: Nov 30 2008
Posts: 49
U.N. panel says world should ditch dollar

U.N. panel says world should ditch dollar

By Jeremy Gaunt, European Investment Correspondent

LUXEMBOURG (Reuters) - A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket. Persaud, chairman of consultants Intelligence Capital and a former currency chief at JPMorgan, said the recommendation would be one of a number delivered to the United Nations on March 25 by the U.N. Commission of Experts on International Financial Reform.

"It is a good moment to move to a shared reserve currency," he said.

Central banks hold their reserves in a variety of currencies and gold, but the dollar has dominated as the most convincing store of value -- though its rate has wavered in recent years as the United States ran up huge twin budget and external deficits. Some analysts said news of the U.N. panel's recommendation extended dollar losses because it fed into concerns about the future of the greenback as the main global reserve currency, raising the chances of central bank sales of dollar holdings.

"Speculation that major central banks would begin rebalancing their FX reserves has risen since the intensification of the dollar's slide between 2002 and mid-2008," CMC Markets said in a note. Russia is also planning to propose the creation of a new reserve currency, to be issued by international financial institutions, at the April G20 meeting, according to the text of its proposals published on Monday.

It has significantly reduced the dollar's share in its own reserves in recent years.

GOOD TIME

Persaud said that the United States was concerned that holding the reserve currency made it impossible to run policy, while the rest of world was also unhappy with the generally declining dollar.

"There is a moment that can be grasped for change," he said.

"Today the Americans complain that when the world wants to save, it means a deficit. A shared (reserve) would reduce the possibility of global imbalances." Persaud said the panel had been looking at using something like an expanded Special Drawing Right, originally created by the International Monetary Fund in 1969 but now used mainly as an accounting unit within similar organizations.

The SDR and the old Ecu are essentially combinations of currencies, weighted to a constituent's economic clout, which can be valued against other currencies and indeed against those inside the basket.  Continued at Reuters site...

Rob Z's picture
Rob Z
Status: Bronze Member (Offline)
Joined: Nov 30 2008
Posts: 49
Re: U.N. panel says world should ditch dollar

Forgot to paste the link, here it is:

http://www.reuters.com/article/Funds09/idUSTRE52H2CY20090318

 

joe2baba's picture
joe2baba
Status: Martenson Brigade Member (Offline)
Joined: Jun 17 2008
Posts: 807
Re: U.N. panel says world should ditch dollar

U.S. SAYS WORLD SHOULD DITCH U.N

now that is a headline i can get my mind around

Mike Pilat's picture
Mike Pilat
Status: Platinum Member (Offline)
Joined: Sep 8 2008
Posts: 929
Re: U.N. panel says world should ditch dollar

thanks joe. the UN is just another form of global government that we don't need at best. It is time the US and its people regained sovereignty.

Reuben Bailey's picture
Reuben Bailey
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Joined: Mar 17 2008
Posts: 138
Re: U.N. panel says world should ditch dollar

At the moment I would say it is the people of the United States who need to take back their sovereignty...

 

DrKrbyLuv's picture
DrKrbyLuv
Status: Diamond Member (Offline)
Joined: Aug 10 2008
Posts: 1995
Re: U.N. panel says world should ditch dollar

This
is a major new phase in the great financial collapse. The Fed has
committed to buying future treasuries in order to "fund" more debt. It
won't work, it is multiplication by division - they create new dollars
without any new value, which just devalues the existing money
circulation.  This is a heinous and hidden tax - as big or bigger than
income tax. 

They are taking this measure because everyone sees the end of the
dollar hegemony - foreign nations demand it.  We're just buying time
and making the end that much more painful.

Larry

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