IMF discusses possible new reserve currency to replace the U.S. dollar!
ST. PETERSBURG, Russia - June 6, 2009 - The International Monetary Fund said it’s possible to take the sigfnificant step of creating a new global reserve currency to replace the dollar over time.
The IMF’s so-called special drawing rights (SDRs) could be used as the basis for a new currency, First Deputy Managing Director John Lipsky told a panel discussing reserve currencies at the St. Petersburg International Economic Forum today.
“There are many, many attractions in the long run to such an outcome,” said Lipsky. “But this is not a quick, short or easy decision,” he said, adding that it would be “quite revolutionary.”
The SDRs would have to be delinked from other currencies and issued by an international organization with equivalent authority to a central bank in order to become liquid enough to be used as a reserve, he said.
As much as 70 percent of the world’s currency reserves are held in dollars, according to the IMF, leading to calls for nations to diversify their cashpiles to avoid excessive exposure to the U.S. economy as it quadruples its budget deficit in a bid to counter the worst economic crisis since the Great Depression.
