Wednesday, June 30, 2010

UN calls for scraping dollar

Source: Press TV§ionid=3510213

A UN report released on Tuesday calls for abandoning the US dollar as the main global reserve currency to achieve greater stability in the world financial system.

"The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency," said the World Economic and Social Survey 2010.

The use of the dollar for international trade came under increasing scrutiny when the US economy fell into recession.

The report said a new global reserve system should be created, which "must not be based on a single currency or even multiple national currencies." Instead, the report advocates using assistance from the International Monetary Fund to create a standardized international system for liquidity transfer.

The report added that developing countries have been hit hard by the US dollar's loss of value in recent years.

"Motivated in part by needs for self-insurance against volatility in commodity markets and capital flows, many developing countries accumulated vast amounts of such (US dollar) reserves during the 2000s," it said.

Nobel Prize-winning economist Joseph Stiglitz, who previously chaired a UN expert commission that considered ways of overhauling the global financial system, has advocated the creation of a new reserve currency system.

Russia and China have also supported the idea.

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