Head of IMF Proposes New Global Reserve Currency

IMF’s Strauss-Kahn suggests IMF may one day provide global reserve asset

Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar.

“That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now,” he said in a speech on the future mandate of the 186-nation Washington-based lending organization.

Strauss-Kahn said such an asset could be similar to but distinctly different from the IMF’s special drawing rights, or SDRs, the accounting unit that countries use to hold funds within the IMF. It is based on a basket of major currencies.

He said having other alternatives to the dollar “would limit the extent to which the international monetary system as a whole depends on the policies and conditions of a single, albeit dominant, country.”

Strauss-Kahn, a former finance minister of France, said that during the recent global financial crisis, the dollar “played its role as a safe haven” asset, and the current international monetary system demonstrated resilience.

“The challenge ahead is to find ways to limit the tension arising from the high demand for precautionary reserves on the one hand and the narrow supply of reserves on the other,” he said.

Several countries, including China and Russia, have called for an alternative to the dollar as a reserve currency and have suggested using the IMF’s internal accounting unit.

Continue reading: Associated Press via ABC News

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Posted in Developing Countries, Globalization, International Relations, Money
One comment on “Head of IMF Proposes New Global Reserve Currency
  1. Dr. O. P. Sudrania says:

    I have suggested the entire globe to be made one nation. Making one global currency can be a good start in that direction. This will also help to address the majority, if not all, problems the world is facing. Also one language, one religion, to bring uniformity as far as possible.

    Dr. O. P. sudrania

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