In mainstream financial circles, the concept of a global currency is often spoken of only with an atmosphere of caution. It is approached always in hypothetical terms. It is whispered of as some far off dream; a socio-economic moon landing in the far reaches of fiscal space. Perhaps in 2015, or 2020, or maybe 2050, but certainly never just over the horizon, or right around the corner posing as an innocuous trade asset created over 40 years ago and used only on rare occasions. Unfortunately, the development of a centralized global security representing the creation of a supranational economic body is much closer than many would care to admit…
The most common argument made in the mainstream against a global currency taking shape is the argument that no other currency in the world today has the strength or widespread circulation necessary to replace the dollar as a primary reserve unit. This is true, if, you only look at separate currencies, and not the big picture.
The reality is, central banks and the IMF have no intention of replacing one national currency with yet another national currency as the world reserve. What they DO intend to do, however, is replace the dollar with a basket of national currencies linked together and homogenized under a single unit. This has been openly announced by the IMF for months, and Dominique Strauss-Kahn even produced a press release explaining the plan (this was before he apparently watched ‘Maid in Manhattan’ 57 times in a row then allegedly tried to “romance” a cleaning lady, which of course landed him in court):
The G20 has also raised discussion of a global currency and a greater oversight role for the IMF on a number of occasions:
A more in-depth look at the IMF plan for the SDR can be seen in a white paper released at the beginning of this year entitled “Enhancing International Monetary Stability – A Role For The SDR?”:
A global currency, or at least the foundation for one, already exists in the form of “Special Drawing Rights” (SDR’s), created by the IMF in 1969 as paper collateral used to replace gold as the primary means of international trade between governments and central banks without the need for Forex exchanges. That is to say, the SDR was used as a tool for displacing the strength of gold. Today, the asset has morphed into a trade mechanism representing a basket of currencies, and, a tool to displace the U.S. dollar as the world reserve currency.
Skeptics will argue that the SDR is a “long way” from being ready to unseat the dollar, but, these economists and pundits rarely consider that the financial circumstances of markets today could quickly change tomorrow. Yes, by the standards of this very moment, a move to elevate the SDR to reserve status is impractical, mainly, because the dollar is still clinging to its relative value and widespread use. This will not be the case for much longer.
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