Fund currency gains followers
International Monetary Fund is considering replacing the dollar with a still more powerful global currency and issued a new report that shows how this right would be in its own currency - Special Drawing Rights (SDRs). According to IMF representatives, their currency would stabilize the global financial system, a view shared even by some economists who say that SDR is less volatile, writes CNN Money. Dominique Strauss-Kahn, IMF director, admits there are some technical hurdles in terms of SDR, but is convinced that it can correct global imbalances. The aim should be that central banks have reserves to better reflect the global economy since the dollar is vulnerable and affected the U.S. economy and the changes made in Washington. Besides the introduction of a reserve currency, the IMF proposed bond and create their own central banks to reduce reliance on U.S. securities. Moreover, the same money could be used for trading oil or gold. IMF representatives explained that oil price increases when the dollar depreciates, so use SDR's to prevent exploitation of oil rises in energy that occurs when the dollar is going through a worse period. IMF sees financial solution to the problems extended use of a global currency - SDR's - and also stated that it is necessary to increase the role occupied by Chinese currency in international economic relations, the U.S., unemployment declined, sending a wave of optimism in international financial markets. Dominique Strauss-Kahn, IMF director, suggests the existence of a global currency to eliminate the dominance of U.S. dollar could help alleviate future financial instability. In a speech in Washington, Strauss-Kahn argued that the reserves that member countries keep them in the fund could be used instead of U.S. dollars, to assess international trade. So-called special drawing rights (SDRs) ptuea would be a good alternative to the U.S. dollar in foreign exchange reserves of central banks, believes Strauss-Kahn was quoted by The Guardian. "DST's use of the denomination of international trade and financial assets could be an excellent buffer against exchange rate volatility," said Strauss-Kahn, while "the issuance of bonds denominated in SDRs could establish a new class financial assets. IMF published a project that supports the allegations of Strauss-Kahn, inviting the top economists in discussions on the future international financial system. Governments exchange risk a war if they try to solve domestic problems through exchange rates, International Monetary Fund warned the president. Dominique Strauss-Kahn's comments came ahead of a strong depreciation of the yen, Japan's central bank option due to the introduction of new currency in the circuit (Quantitative easing) by reducing the interest rate and monetary policy by setting up a new fund to buy bonds governmental and other assets, informs Financial Times. "Translated to Ninel facts, such an idea would be a massive risk to global economic recovery. An approach of this type would have a detrimental impact on the long term." The yen fell against the U.S. dollar Tuesday after Japan's central bank made its decision public. Government bonds, stocks rose but gold prices amid expectations related to a similar policy for other central banks in major economies. In recent weeks, several major economies have adopted measures to revitalize the growing pressure on their currencies. Japan intervened in currency markets to sell yen for the first time in six years. Brazil has threatened to intervene to speculators that the real devaluation earlier this week and doubled the taxes on the purchase of bonds by non-residents, in an attempt to reduce capital flows