By George Whitten, Jerusalem Bureau Chief
The United Nations has called for the replacement of the U.S. Dollar and the creation of a global reserve bank and a new global currency to protect emerging markets from the “confidence game” of financial speculation according to a report obtained by Worthy News.
The report, published by the United Nations Conference on Trade and Development, said one solution could be the “issuance of special drawing rights (SDRs)” through the International Monetary Fund (IMF) multilateral development banks. The report called for “an international reserve system that uses one or several national currencies as a reserve asset” as a means of international payments.
Earlier this year, China called for the creation of a new global “supranational currency” such as the International Monetary Fund’s special drawing rights (SDR’s), to add stability to global financial markets.
The UN said in its report that, “Such a multilateral system would tackle the problem of destabilizing capital flows at its source.” It would, the UN added, “remove a major incentive for speculation and ensure that monetary factors do not stand in the way of achieving a level playing field for international trade.”
The UN stressed a new financial system would also “get rid of debt traps and counterproductive conditionality.” It also said that “countries facing strong depreciation pressure would automatically receive the required assistance once a sustainable level of the exchange rate had been reached in the form of swap agreements or direct intervention by the counterparty.”
China, India, Brazil and Russia have called for a replacement to the dollar as the main reserve currency after the worldwide financial crisis was sparked by the collapse of the U.S. mortgage market.
On Sunday, a key Chinese official warned about the collapse of the dollar saying, “If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies.”
China holds more than $2 trillion dollars in U.S. bonds, the largest in the world.