EU leaders confer
This week’s meeting of the G20 will certainly address economic reform. But will it address the idea of replacing the dollar as the reserve currency?
If Nobel-prize winning economist Joseph Stiglitz had his way a global reserve system would be created.
Stiglitz, who chairs a United Nations advisory commission, was quoted by the United Nations General Assembly as saying that a global reserve system “would reduce the current systems’ endemic inequity, which was perhaps best exemplified when developing countries lent money to the United States at very low interest rates instead of developing their own countries.”
Some suggest the International Monetary Fund’s Special Drawing Right (SDR) should be given a greater role.The SDR is an international reserve asset,created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. Its value is based on a basket of key international currencies.
Writing Prompts
- How does the current world currency situation affect your company and your clientele?
- What changes do you recommend to your clients’ holdings in light of today’s political-economic churn?
- If you were involved with currency trading or international business at the time that the EU adopted the Euro, you might reflect on that time and bring forward lessons applicable today.
- Do you or your company do business in China or Russia? These countries are advancing the idea of switching from the greenback.
- How will decisions made by the G20 affect mortgages in the US?