[P2P-F] Fwd: larger context ? : 10 Feb 2011 - Dominique Strauss-Kahn calls for new world currency

Fri May 20 19:09:07 CEST 2011

---------- Forwarded message ----------
From: Dante-Gabryell Monson <dante.monson at gmail.com>
Date: Fri, May 20, 2011 at 11:38 PM
Subject: larger context ? : 10 Feb 2011 - Dominique Strauss-Kahn calls for
new world currency
To: econowmix at googlegroups.com

http://www.telegraph.co.uk/finance/currency/8316834/International-Monetary-Fund-director-Dominique-Strauss-Kahn-calls-for-new-world-currency.html

International Monetary Fund director Dominique Strauss-Kahn calls for new
world currency Dominique Strauss-Kahn, managing director of the
International Monetary Fund, has called for a new world currency that would
challenge the dominance of the dollar and protect against future financial
instability.

By Andrew Trotman
<http://www.telegraph.co.uk/journalists/andrew-trotman/> 5:14PM
GMT 10 Feb 2011

 “Global imbalances are back, with issues that worried us before the crisis
- large and volatile capital flows, exchange rate pressures, rapidly growing
excess reserves - on the front burner once again,” Dominique
Strauss-Kahn<http://www.telegraph.co.uk/finance/dominique-strauss-kahn/>
said.
“Left unresolved, these problems could even sow the seeds of the next
crisis.”

“When we worry about the deficiencies of the international monetary system,
we are mostly worrying about volatility,” he added. There is “a sense that
money sometimes flows around the globe in too-volatile a fashion and that
countries need a more stable, more predictable external environment in order
to prosper”, he said.

He suggested adding emerging market countries' currencies, such as the yuan,
to a basket of currencies that the IMF administers could add stability to
the global system.

China, which holds much of its $2.85 trillion mountain of reserves in US
Treasury bonds, has repeatedly expressed unease about the value of the
dollar, while American politicians have complained that Beijing gains an
unfair advantage by keeping its own currency cheap.

Strauss-Kahn saw a greater role for the IMF's Special Drawing Rights, which
is currently composed of the dollar, sterling, euro and yen, over time but
said it will take a great deal of international cooperation to make that
work.

 "Using the SDR to price global trade and denominate financial assets would
provide a buffer from exchange rate volatility," Strauss-Kahn said, while
"issuing SDR-denominated bonds could create a potentially new class of
reserve assets".

Russian President Dmitry Medvedev last month said the currencies of Brazil,
Russia, India and China should be included in the SDR valuation basket. The
same month, Sarkozy said that the yuan should be included, and US President
Barack Obama’s administration said it supports such a transition “over
time”.

However, among the yuan's drawbacks is that it is not freely traded and
China's capital markets are largely closed.

Strauss-Kahn said: "Increasing the role of the SDR would clearly require a
major leap in international policy coordination. For this reason, I expect
the global reserve asset system to evolve only gradually, and along with
changes in the global economy."

Strauss-Kahn's views come a week before finance ministers from the Group of
20 developed and developing nations meet in Paris to discuss proposals by
French president Nicolas Sarkozy for changes to global economic governance.

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