UN Document talks about need to change from the US Dollar as Reserve CurrencySubmitted by Quelewenski on Tue, 02/07/2012 - 03:43
This should shed some light on the ulterior motives of the FED!
This excerpt below comes from the un.org website in a document called "World Economic Situation and Prospects 2010". You can read it online on the United Nations website. This excerpt is copied from the bottom of page 100 to the top of page 103 of that document. You may read the entire document at the following link.
This section talks about the US Dollar being used as the world reserve currency, but also discusses how to transition away from the Dollar to the SDR (Special Drawing Rights) (or another equally strong and less volatile currency).
You wonder why the FED keeps printing money? To crash the DOLLAR so that this reserve currency can be ushered in.
It also mentions (after the #49, paragraph begins with the words, "The introduction of a full-fledged international currency") that this may take a long time to impliment because it would take "political will, vision and courage, all of which are still lacking." When I think of our current President Obama, I see someone (who has no love for our country and history) who would INDEED have this "political will, vision and courage (from their (the UN's) viewpoint, not mine)" to crash the dollar on purpose to open the world financial system to a new ONE WORLD CURRENCY!
Read the excerpt below...
Find the document at the following link: http://www.un.org/en/development/desa/policy/wesp/wesp_archi...
THE GLOBAL RESERVE SYSTEM
In April 2009, the G20 decided on a general special drawing rights (SDR) (Remember this ABBREVIATION!!!)allocation by the IMF equivalent to $250 billion as part of the package to raise official lending capacity in response to the crisis. By so doing, the world leaders, for the first time since the late 1960s,recognized the need to significantly boost international liquidity using an international reserve unit. The proposed general allocation was approved by the Fund’s Board of Governors and came into effect in August 2009. Also, in August 2009, the Fourth Amendment to the IMF Articles of Agreement adopted in 1997—which corrects for the fact that countries which joined the Fund after 1981 have never received an SDR allocation—entered into force. The special one-time allocation of about $33 billion was made in September 2009. With the two fresh allocations totalling roughly $283 billion, the outstanding stock of SDRs increased nearly tenfold from about $33 billion to about $316 billion.
The ongoing financial crisis has brought to the fore the deficiencies of the present international monetary system, in which a national currency (the United States
dollar) serves as a dominant source of international foreign-exchange reserves. These deficiencies include growing global imbalances, exchange-rate instability and the possibility of an erosion of confidence in the dollar as a reserve currency (see chapter I). The spread of greater exchange-rate flexibility did not produce changes that reduced trade and financial imbalances; in fact, it contributed to the inherent instability of the system.
Exchange-rate adjustments were not quantitatively sufficient and often progressed in the wrong direction, owing to the fact that the United States dollar, as a reserve currency, serves as a benchmark for many other currencies and an anchor for international asset prices.
In the era of globalization, the use by all countries of a widely accepted national reserve currency has its clear benefits owing to network externalities. However, the costs of such an arrangement in terms of systemic instability may have started to exceed the benefits. Similarly, the costs to the United States as supplier of global reserves may also be rising. Increased imbalances have had an adverse effect on United States domestic demand and on external demand for United States products as well as, more generally, on the country’s potential ability to maintain economic policy autonomy.
There have been suggestions for a move away from the almost exclusive reliance on the United States dollar towards a system based on multiple, competing national reserve currencies. However, the experience of the interwar period specifically suggests that such a system adds another element of instability: that associated with exchange-rate volatility among currencies used as reserve units, stemming from the possibility of sharp shifts of demand from one international currency to the other, since they are likely to be close substitutes.
In addition, such a move would not solve the inherent inequity in the current system, as reserve assets would still be provided by industrial countries. Moreover, developed countries issuing reserve currencies are likely to account for an increasingly limited share of the world economy. Hence, the demand for international reserves will likely grow faster than the capacity of these countries to provide a smooth supply.
Discussions concerning wider use of a truly international currency have been gaining momentum. The international community should seize this opportunity to start deliberations on the feasibility and desirability of the creation of a new, more stable and equitable international monetary system. While, unlike in the late 1960s, the provision of global liquidity is not an issue, the current problems are associated with the control of global liquidity, and significant equity issues regarding access by developing countries to such liquidity.
49 Moreover, a system based on a truly global reserve currency would create a more equitable method of sharing the seigniorage derived from providing global liquidity. The introduction of a full-fledged international reserve currency, based, for instance, on the proposal by John Maynard Keynes, may take a long time as it requires extraordinary political will, vision and courage, all of which are still lacking. In this regard, it has been argued that a more realistic way of reform may be to broaden existing SDR arrangements which, perhaps, over time could evolve into a new and widely accepted world reserve currency.
Making SDR issuance automatic and regular could be a first step forward. It has been suggested that the size of the issues could be linked to the estimated additional demand for foreign-exchange reserves resulting from the growth of the world economy. There have also been calls to issue SDR in counter-cyclical fashion to finance world liquidity and provide official support to developing countries during crises. One version of the proposal to use SDR in a counter-cyclical manner envisages the development of an appropriate mechanism to withdraw SDR should global liquidity become excessive or inflationary. It is worth noting that the procedure under which countries holding 85 per cent of the IMF voting power must agree before SDRs can be issued may not be appropriate if the Fund were authorized to provide additional SDR liquidity in periods of shortage. Rather, it must be able to act more like a global central bank and international lender of last resort. Because the current mechanism of SDR allocation is based on IMF quotas, such new allocations of SDR would provide developing countries with additional liquidity of only about $110 billion. This suggests that the issue of the SDR allocation should be closely linked to the reform of IMF quotas. Besides, as not all members need an increase of their international reserves, the Fund should explore mechanisms to redistribute SDR to countries most in need.
It has been suggested also that the international community revive the idea of the substitution account put forward in 1971. Under this proposal, official dollar holders could deposit part of their reserves in a special account in the IMF denominated in SDRs. The centralized management of a part of member countries’ reserves by the IMF would help promote both a greater role for the SDR as a reserve currency and more effective reserve management at the global level, as it would allow central banks to diversify out of dollars without causing sharp exchange-rate swings and, probably, use some excessive reserves for domestic development. A more ambitious version of the proposal calls for an open-ended SDR-denominated fund set up by the IMF, allowing subscription and redemption in the existing reserve currencies by various investors as desired. This arrangement is thought to form the basis for promoting the development of SDR-denominated assets and partially allowing the management of global liquidity in the form of existing reserve currencies.
It is widely recognized that making the SDR an attractive unit in which to hold central bank reserves requires deep and liquid markets in SDR claims. To achieve this, the issuance and use of SDRs by the IMF, Governments, banks and non-financial firms need to reach a certain critical mass. In other words, it will be necessary to overcome the coordination problem (prospective issuers should have evidence that others would act in like manner). In the past, all attempts to commercialize SDR have been unsuccessful.
Another important issue is a settlement system between the SDR and national currencies to make the unit an acceptable means of payment in international trade and financial transactions. Such a system should be able to facilitate the direct exchange of SDR claims not only into dollars but into all constituent currencies. In order to accommodate the expected increase in the volume of SDR transactions resulting from new allocations, the IMF has called for an expansion of the capacity of voluntary arrangements to ensure adequate liquidity in the SDR market. Several countries, including China and the United States, have already committed themselves to establishing a new arrangement or expanding the capacity of their existing arrangements in the light of the new allocations.
Furthermore, SDRs are currently valued against a basket of currencies consisting of the euro, the Japanese yen, the pound sterling and the United States dollar. To gain global prominence, the number of constituent currencies of the SDR would have to be increased to include monetary units of both developed and developing countries.