UN proposal to form new world currency has no chance to be successful: ECIPE head
Azerbaijan, Baku, Sept. 11 / Trend , A. Badalova/
The UN proposal on forming a new world currency to replace the dollar will have no chance to be successful, believes Fredrik Erixon, the Director of the European Center of International Political Economy (ECIPE).
"The dollar is not going to be replaced entirely, but we will continue to see a diversification," Erixon wrote to Trend in an email.
The UN experts suggested replacing the U.S. dollar with a new currency. The report, made by the UN expert office dealing with trade and development, said that the dollar can no longer be the currency of international calculations. "We need to create a new international currency, tied to gold," the report says.
Erixon the Euro will continue to rise as a world currency. So will the RMB and the YEN.
"But they will not replace the dollar. We will probably see more of regional currency co-operations," Erixon said.
The long-term trend is a world-currency diversification, not a centralization to a bureaucratic body with no economic power to execute monetary policy or defend its position, Erixon said.
According to the experts of the organization, the UN countries should agree to establish a global reserve bank, which will issue the currency and monitor the exchange rates of the member-countries. Thus, the experts urge to return to a modified Bretton Woods system.
Erxion believes there is not need to form such a bank. There are problems with many currencies overall and a heavy reliance on the dollar as the world currency, he said.
"Also, in an ideal world we would only have one currency. But we don't live in an ideal world - far from it, alas," Erixon said.
He believes to create yet another paper currency is not going to solve any problem.
"Very few is going to use it. To be trustworthy, money has to be in circulation and be a tangible store of value for people and businesses," Erixon said.
Every day the dollar is yielding its position more and more. During this morning's session, the European currency exchange rate has set new records against the U.S. currency, amounting to $1.4613, which is this year's highest mark.
The Western analysts, however, continue to believe in the dollar, predicting its increase by late 2009.
"The best time for the dollar is still ahead," believe the analysts of Capital Economics, one of Britain's leading consulting firms for Economic Research. "Confidence of the U.S. to foreign capital will fall. In addition, growth in the United States in 2010 will be higher than in the eurozone and the UK."