United Nations: Drop the US Dollar as World Reserve Currency

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United Nations: Drop the US Dollar as World Reserve Currency

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UN: Drop the Dollar and use the SDR, made up of US$, Yen, Euro and Pound
New York, United States, 9 September, 2009. The United Nations has stepped into the debate on the future of the US Dollar - to urge that it be dropped as the world's reserve currency. What was once seen as a slightly crackpot idea has quickly gained traction in world capitals, particularly Beijing, Moscow and Tehran, but this is the first time that a world organisation has openly taken this position.
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The UN Conference on Trade and Development, or UNCTAD, has said in its new report that trade imbalances and the breakdown in the way currencies and capital rules work was 'largely' responsible for the financial crisis. Although this fact has been pointed out by many economists and politicians, no-one has spelled out a potential solution - until now. It is calling for the biggest overhaul of the world's monetary system since World War II. In effect, it is suggesting that a new composite or artificial currency be created, that would be a weighted basket of major currencies. In other words, rather than having the US Dollar as the sole reserve currency, the new system would bring in a range of currencies that should balance out into a more stable system. The idea would be to use the IMF's Special Drawing Rights (SDRs), which are formed from a basket of currencies but are used for accounting purposes only. Under the plan, the 'supranational' currency would start to be used for active trading