The U.N. Department of Economic and Social Affairs commented in a recent report that the US dollar is unreliable to serve as an international currency; a more reliable and stable unit should replace the US dollar.
This comment was brought forth after the fall of the US economy in the recent recession as the dollar was viewed with concern as the international trade currency. The UN report commented that the US dollar is not as stable as it needs to be as an international reserve currency. It was proven as an unstable storage of value that can affect international trade.
A lot of countries, especially those in Asia, have accumulated quite a fair amount of US dollar reserves; hence undervaluing their own currencies and lowering their import ability on goods.
IMF has been advocating the change to a standardized international liquidity transfer system for a long time, which is now the same thought of the World Economic & Social Survey conducted in 2010.
This new system is supposed to free countries from buying up other countries’ currencies; China has already started on this path with the greenback. The IMF suggested that the new system would allow countries the privilege to claim other countries’ currencies or SDRs (special drawing rights) and not only one particular currency.
The SDR is supported by various countries’ currencies which protects against the possible volatility of one particular country’s currency. With IMF defining the SDR value, any country’s currency value can be adjusted according to its change.
These initiatives are favored by Ban Ki-moon, U.N. Secretary-general, to assist less-developed countries in participating and integrating a global economy as the international market is sustained and the global financial systems are more stable.
The survey will also provide assistance in an enhanced social welfare in addition to the proposed reforms. The survey showed a decrease in poverty from 1.8 billion in the year 1990 to 1.4 billion in the year 2005 for those who survive on just $1.25 or less a day; however most of the reduction was found in China with increased figures in sub-Saharan Africa as well as in South Asia.
Moreover, each country’s income inequalities have seen an increase since early 1980s; there are some exceptions. Rob Vos, a UN director in the development policy and analysis division, commented that too little aid in terms of resources is provided which is too fragmented and volatile to be of any good use to the needy countries.
It is projected according to the survey that the world population will grow to 9 billion by the year 2050 with 85% concentration in developing countries. The global economy should arrive at a sustainable system that caters for a ‘decent living’.
At that time, 1 out of 4 people in a developed country will be over 65 years of age with 1 in 7 for other developing countries. As more and more elderly people make up the larger population, there will be more urgent calls for proper pension and health care benefits to sustain the aging population.
Recent Comments