UN calls for new reserve currency to end dollar 'privilege'

[Naveed Yaseen]

ISTANBUL (October 07 2009): The United Nations called on Tuesday for a new global reserve currency to end dollar supremacy which has allowed the United States the "privilege" of building a huge trade deficit. "Important progress in managing imbalances can be made by reducing the reserve currency country's 'privilege' to run external deficits in order to provide international liquidity," UN under-secretary-general for economic and social affairs, Sha Zukang, said.

Speaking at the annual meetings of the International Monetary Fund and World Bank in Istanbul, he said: "It is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity."

He said: "Greater use of a truly global reserve currency, such as the IMF's special drawing rights (SDRs), enables the seigniorage gained to be deployed for development purposes," he said. The SDRs are the asset used in IMF transactions and are based on a basket of four currencies - the dollar, euro, yen and pound - which is calculated daily. China had called in March for a new dominant world reserve currency instead of the dollar, in a system within the framework of the Washington-based IMF.

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