New York, June 30, IRNA — The dollar is an unreliable international currency and should be replaced by a more stable system, the United Nations Economic and Social Council said in a report.
“The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency,” the report said.
Many countries, in Asia in particular, have been building up massive dollar reserves. As a result, those countries’ currencies have become undervalued, decreasing their ability to import goods from abroad.
The World Economic and Social Survey 2010 is supporting a proposal long advocated by the International Monetary Fund to create a standardized international system for liquidity transfer.
Under this proposed system, countries would no longer have to buy up foreign currencies, as China has long done with the U.S. dollar. Rather, they would accumulate the right to claim foreign currencies, or special drawing rights, or SDRs, rather than the currencies themselves.
The U.N. report said that the special drawing rights would be backed by a basket of currencies, which would make them less susceptible to volatility in any one currency. And because the value of a special drawing right is defined by the IMF, changes in the value of any one currency could be adjusted for. Read the rest of this entry »