Global financial body wants complete overhaul as soon as possible
Tuesday, Nov 17, 2009
The head of the International Monetary Fund has once again called for a new global currency to replace the Dollar, adding that the momentum to instigate such a system is fading.
Dominique Strauss-Kahn told a forum
on Tuesday that he wishes to see an emboldened IMF pave the way for the emergence of a global currency based on the monetary body’s special drawing right (SDR).
“That probably has to be a basket,” Strauss-Kahn said of the eventual replacement for the dollar. “In a globalized world there is no domestic solution,” he added.
The IMF head said that the world can no longer rely on a currency issued by a single country to ensure global financial stability.
Strauss-Kahn also said that China should re-value its currency in order to straighten out global economic distortions and imbalances.
Strauss-Kahn said that since the G20 summit in March, where agreements were made to reform the global monetary system, political willingness to carry out such an overhaul has waned.
Former IMF chief, Michel Camdessus, added that “time is of the essence” for global monetary reform. Camdessus said that he backs a shift of power to big emerging economies to act as a corollary of a strengthened role for the SDR.
“This favourable window of opportunity is there. It will not stay open forever,” Camdessus told the forum.
The IMF first touted the possibility of a new global currency in March
. The issue was then debated at the G20 Summit in London just days later.
A clause in Point 19 of the communiqué issued by the G20 leaders led to analysts describing the dawn of a “revolution in the global financial order.”
“We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity,” The clause stated.
SDRs are Special Drawing Rights, a synthetic paper currency issued by the International Monetary Fund that had lain dormant for half a century.
“In effect, the G20 leaders have activated the IMF’s power to create money and begin global ‘quantitative easing’. In doing so, they are putting a de facto world currency into play. It is outside the control of any sovereign body. Conspiracy theorists will love it.” Ambrose Evans-Pritchard of the London Telegraph wrote at the time.
“The world is a step closer to a global currency, backed by a global central bank, running monetary policy for all humanity.” he added.
The same conclusion was drawn by the Washington Post’s Anthony Faiola, who described how the IMF is on course to be transformed into “a veritable United Nations for the global economy.”
The move has also been endorsed separately by the World Bank
and the UN