Call for a global currency to replace dollar

2011-08-25 10:06

Steps should be taken to create an international currency to replace the dollar as the world’s sole reserve currency, developmental economist Meghnad Desai has said.

According to a report in Business Day, Desai said that special drawing rights (SDRs) could be reconfigured for use as the new currency.

“The world needs a better monetary arrangement. We can have an international currency that will take the burden off the dollar as the sole reserve currency,” he said at a dialogue in Johannesburg organised by Business Day yesterday.

There have been mounting calls for a global reserve currency that will give more weight to developing countries, reflecting their growing importance in the world economy.

Desai said that the new SDR should include currencies from the Brics group of emerging economies, which South Africa has just joined.

Brazil, Russia, India and China are the founding members.

At present, SDRs are maintained by the International Monetary Fund and can be exchanged for euros, yen, pounds or dollars. They represent a claim to currency held by International Monetary Fund member countries in their foreign exchange reserve assets.

Desai said it would probably take a decade for this to happen.

The United States “would be very reluctant to give up the privilege of issuing a currency that people had to hold”. 

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