IMF Document Illustrates Plan To Raise Global Currency - RawStory

[WillyT]

IMF document illustrates plan to raise global currency
By Stephen C. Webster
Thursday, August 5th, 2010 -- 8:34 pm

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It's no secret that many of the world's largest industrialized nations are somewhat eager to ease their reliance on the U.S. dollar. For months China and Russia have pushed ever subtly, for a new "global reserve currency," to give governments around the world enhanced economic stability in the event of greater fluctuations in the dollar's value.

But what wasn't known, until recently, is how far along the International Monetary Fund was in the planning of elevating its so-called "special drawing rights" from mere international agreement to an actual, legitimate global currency.

The report examines what it calls the "imperfections" of the global reserve banking structures, and how hoarding of reserves by sovereign nations can subject the system to risk and occasional shocks.

In 35 pages of extrapolation and footnotes, the IMF's Strategy, Policy and Review Department lays out the how and why of a global currency, which would move from an "inside money" as the SDR to an "outside money" that is traded by governments.

However, they conclude that "the ideas discussed are unlikely to materialize in the foreseeable future absent a dramatic shift in appetite for international cooperation."

The PDF document appeared to have been taken offline at time of this writing, but a cached version was still available. The document is from April, but was only recently noticed by Financial Times.

" the eyes of the IMF at least, the best way to ensure the stability of the international monetary system (post crisis) is actually by launching a global currency," they note.

"And that, the IMF says, is largely because sovereigns — as they stand — cannot be trusted to redistribute surplus reserves, or battle their deficits, themselves."

The IMF goes on to explain:

Reserve accumulation has accelerated dramatically in the past decade, particularly since the 2003-4. At the end of 2009, reserves had risen to 13 percent of global GDP, doubling from their 2000 level, and over 50 percent of total imports of goods and services. Emerging market holdings rose to 32 percent of their GDP (26 percent excluding China). Twenty-seven of the top 40 reserve holders, accounting for over 90 percent of total reserve holdings, recorded doubledigit average growth in reserves over 1999-2008.

Holdings have also become increasingly concentrated, with over half the total held by only five countries. These numbers exclude substantial foreign assets of the official sector not recorded as reserves, including in sovereign wealth funds (SWFs), and yet invested in liquid, dollar denominated financial instruments, that have grown even more in recent years.

The global currency IMF envisions, they simply call "bancor". They continue:

though an SDR-based system would move away from a dominant national currency, the SDR’s value remains heavily linked to the conditions and performance of the major component countries. A more ambitious reform option would be to build on the previous ideas and develop, over time, a global currency. Called, for example, bancor in honor of Keynes, such a currency could be used as a medium of exchange—an “outside money” in contrast to the SDR which remains an “inside money”.

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More: http://rawstory.com/rs/2010/0805/imf-documents-illustrate-plan-turn-drawing-rights-global-currency/

:shrug:

[truedelphi]

1. people in my neck of the woods are eager to stop relying on the dollar as well

It's called barter.

[WillyT]

2. LOL... I Used To Live In The Woods...

And you are correct... barter was the main economic system.

Worked real well too.

:hi:

[truedelphi]

3. of course, it goes without saying that neither you

Or I would condone such activity.

I mean, the IRS is unfarirly left out of the loop, so I can only say''

BARTER IS A DEPLORABLE SITUATION

I mean,if everyone in the middle class turns to it, then I guess the ante will have to be raised on the Upper One Percent of tax payers, and that would mean a catastrophic loss of jobs, wouldn't it!