It's not the first time this has been suggested, but it's the first time the U.N. has suggested it. China, India, Brazil and Russia this year called for a replacement to the dollar as the main reserve currency after the collapse of the U.S. mortgage market led to the worst global recession since World War II.
The report said that
“[...] dominance of the dollar as the main means of international payments [has] played an important role in the build-up of the global imbalances in the run-up to the financial crisis. Another disadvantage of the current international reserve system is that it imposes a greater adjustment burden on deficit countries (except if it is a country issuing a reserve currency) than on surplus countries.
“Such a multilateral system would tackle the problem of destabilizing capital flows at its source. It would remove a major incentive for speculation and ensure that monetary factors do not stand in the way of achieving a level playing field for international trade.
It would also get rid of debt traps and counterproductive conditionality. The last point is perhaps the most important one: countries facing strong depreciation pressure would automatically receive the required assistance once a sustainable level of the exchange rate had been reached in the form of swap agreements or direct intervention by the counterparty.”
China owns a huge amount of U.S. debt. As late as Sunday, they expressed their dismay at the current U.S. monetary policy.
"If they keep printing money to buy bonds it will lead to inflation, and after a year or two the dollar will fall hard. Most of our foreign reserves are in US bonds and this is very difficult to change, so we will diversify incremental reserves into euros, yen, and other currencies."
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