A UN committee has advocated for the dumping of the US dol lar as a global reserve currency. Instead, the committee, in a new report made available to Pan African News Agenc y (PANA) on Thursday, called for a replacement currency.
The report, entitled: “The World Economic and Social Survey”, said the dollar ha d been unable to safeguard value, which is a requisite for a stable reserve curr e ncy.
PANA reports that the latest clamour for replacing the dollar as the global curr ency rose after the 2008 economic downturn which, the UN committee said, “showed
that the US currency was ill-equipped to defend international trade”.
It called the dollar an “unreliable international currency that should be replac ed by a more stable system”.
It noted that, “countries with massive dollar reserves have seen their funds und ervalued as a result of the dollar’s troubles and impacted adversely on their im p ort trade”.
The report cited support for a standardized international system for liquidity t ransfer that would remove dependence on storing up reserves in a particular curr e ncy.
Instead, it backed special drawing rights made up of a basket of currencies. Und er an existing system, the value of special drawing rights is determined by the I nternational Monetary Fund (IMF).
“The IMF also can made adjustments in currency rates in response to market fluct uations,” it added.
The report stated that the UN supported the initiatives and hoped that finding a lternatives to the dollar would help sustain international trade and financial s y stems and allow less-developed countries to participate more meaningfully in the
“Getting back on track will require significant reforms in global economic gover nance and new thinking to put the world on a more sustainable path of developmen t ,” it said.
“This year’s report looks at the prospects for post-crisis global development an d concludes that a major rebalancing of the global economy is needed to make it s ustainable,” said Rob Vos, the director of the development policy and analysis d i vision at the UN Department of Economic and Social Affairs.
“To that end, it argues for much more effective mechanisms of global economic go vernance, requiring a major overhaul of the existing ones,” he told reporters at the launch of the report.
Vos said many of the global crises in recent years, including fuel and food cris es, were caused to a large extent by systemic failures in the global economy and
weaknesses in the mechanisms for global governance.