IMF boss calls for new international currency
International Monetary Fund managing director Dominique Strauss-Kahn (pictured) has called for a new world currency to help reduce the world’s dependence on the dollar and get a tighter grip on financial markets.
In a speech in Washington last night, Strauss-Kahn’s said as an alternative the reserves held by nations within the IMF could be used as a proxy currency, or special drawing rights (SDR), to price international trade and also provide an alternative to the dollar in central banks’ foreign currency reserves.
He added that SDRs could be used to price internationally traded assets such as sovereign bonds and good like commodities to peg currencies and report balance of payments data
The value of SDRs are currently measured on basket of four major currencies – the dollar, sterling euro and yen and Strauss-Kahn suggested more this should be extended to cover a broader depth of currencies including those in key emerging markets such as the Chinese yuan.
Strauss-Kahn said: ‘The SDR might help serve respectively the following objectives: reducing the extent and costs of international reserve accumulation; augmenting the supply of safe global assets and facilitating diversification; and reducing the impact of exchange rate volatility among major currencies.’
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