The United Nations Conference on Trade and Development said in a report published Monday that the U.S. dollar should be replaced as the world’s standard reserve currency, giving rise to a new global currency managed by an as-yet undetermined financial regulatory organization.
The conference specifically emphasizes the enhancement of the International Monetary Fund’s “special drawing right” (SDR), which may serve as the “supranational” currency.
“There is a need to make the IMF a true representative of the world’s leading economies. It’s not there right now,” said Russian finance minister Alexei Kudrin in June, noting that China had a lower representation quota than Switzerland or Belgium.
Over the weekend, U.S. Treasury Secretary Timothy Geithner argued successfully to strengthen the “Basel II” framework for international commerce, which would see all G20 member nations increase their currency liquidity and allow centralized, “global supervision” of financial industries. The Obama administration is committed to full compliance with the framework by 2011.
The Group of 20 finance ministers and central bank governors plan to meet in Pittsburgh, Pennsylvania on Sept. 24 and 25. Several major liberal groups are planning demonstrations, including the A.N.S.W.E.R. Coalition. The city has already secured a deal to use National Guard troops provide a security buffer for the world’s financial elite during their meeting.
Also on Sunday, a key Chinese official predicted that the dollar’s increasing supply, which grows with added liquidity, meant the currency could “fall hard” within “a year or two.” The official also signaled that China is moving its reserves away from the dollar and toward gold, euros and yen.
Washington has staunchly defended the dollar as the world’s reserve, with President Obama, Federal Reserve chairman Ben Bernanke and Treasury Secretary Timothy Geithner all insisting there is no need for a new global reserve currency.
The outcome will be bad but at least we can watch the elites fight between themselves till then.