Tuesday, 8 September 2009

UN Says New Currency Is Needed to Fix Broken ‘Confidence Game’

The following news report is well worth reading and fits in with many of my previous postings regarding the growing movement towards reducing the dependency of the world on the US dollar.

Sept. 7 (Bloomberg) -- The dollar’s role in international trade should be reduced by establishing a new currency to protect emerging markets from the “confidence game” of financial speculation, the United Nations said.

UN 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, the Geneva-based UN Conference on Trade and Development said today in a report.

China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the financial crisis sparked by the collapse of the U.S. mortgage market led to the worst global recession since World War II. China, the world’s largest holder of dollar reserves, said a supranational currency such as the International Monetary Fund’s special drawing rights, or SDRs, may add stability.

I shall return to a longer discussion of this piece and the sensitivity of the matter in relation to the currently fragile US Treasury market in another post.

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