IMF document illustrates plan to raise global currency
By Stephen C. Webster
Thursday, August 5th, 2010
It’s no secret that many of the world’s largest industrialized nations are somewhat eager to ease their reliance on the U.S. dollar. For months China and Russia have pushed ever subtly, for a new “global reserve currency,” to give governments around the world enhanced economic stability in the event of greater fluctuations in the dollar’s value.
But what wasn’t known, until recently, is how far along the International Monetary Fund was in the planning of elevating its so-called “special drawing rights” from mere international agreement to an actual, legitimate global currency.
The report examines what it calls the “imperfections” of the global reserve banking structures, and how hoarding of reserves by sovereign nations can subject the system to risk and occasional shocks.
In 35 pages of extrapolation and footnotes, the IMF’s Strategy, Policy and Review Department lays out the how and why of a global currency, which would move from an “inside money” as the SDR to an “outside money” that is traded by governments.
However, they conclude that “the ideas discussed are unlikely to materialize in the foreseeable future absent a dramatic shift in appetite for international cooperation.”