A new United Nations report on Tuesday called for the creation of a new
global reserve currency to replace the U.S. dollar as the single major reserve currency.
"A new
global reserve system could be created, one that no longer relies on the United States dollar as the single major reserve currency," said the report, titled World Economic and Social Survey 2010: Retooling Global Development.
"The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency," it said.
The report pointed to "a trap inherent in the reserve and payment system, whereby reserve-creating countries are able to run payments deficits as long as other countries find it in their interest to keep building up their international reserves in the currencies of the reserve-creating countries."
"If this trap is not eliminated, all financial regulatory reform will come to nought," it warned.
A new system should allow for better pooling of reserves at the regional and international levels, it said.
"It must not be based on a single currency or even multiple national currencies but, instead, should permit the emission of international liquidity (such as SDRs) to create a more stable global financial system."
"A feasible evolutionary path towards a more stable system is one along which there is an increased use of SDRs, within a system of nationally supplied reserve assets, dominated by the dollar," it said.
The SDR, or Special Drawing Rights, is an international reserve asset, created by the International Monetary Fund (IMF) in 1969 to supplement its member countries' official reserves.
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