Germany’s minister for economic cooperation and development, Heidemarie Wieczorek-Zeul, said that ideas for making a new international reserve currency to replace the dollar are developing but require refinement.
Miguel d’Escoto Brockmann, the president of the U. N. General Assembly, created a group of experts to examine the global financial crisis and recommend solutions. Heidemarie Wieczorek-Zeul is a member of this group.
One of the recommendations of the group is to establish a new reserve currency system founded on the International Monetary Fund’s Special Drawing Rights (SDRs). This may replace the U.S. dollar as the main reserve instrument, a concept supported by China.
Joseph Stiglitz, the group’s chairman and Nobel Prize economist, explained to reporters that an SDR reserve system could be phased in over a 12 month period, though he said it was unlikely to happen soon.
U.N. assistant secretary-general for economic development, Jomo Kwame Sundaram, said that “We really need a system where a national issuer of currency does not have the added responsibility of providing global currency.”
The U.N. group report said that a reserve system based on SDR’s “could contribute to global stability, economic strength, and global equity.” In addition, the report said that this type of system would be “feasible, non-inflationary, and easy to implement.”