New column: Down with the dollar! And up with the SDR! (Up with Esperanto, too, while we’re at it)

My new column is about the thrilling rebirth of the special drawing right, the currency of the International Monetary Fund. Need I say more?

One expert on the subject who was very helpful, but didn’t make it into the column, was C. Fred Bergsten, director of the Peterson Institute for International Economics. Bergsten was extolling the potential benefits of SDRs before the things even existed, and was putting plans in place at the Treasury Department in the late 1970s to enable overseas governments that held big dollar reserves to shift some of them into SDRs. He brought up that idea again in late 2007, and now it seems to be getting quite fashionable.

At one point in our conversation, I tossed this quote from the WSJ at him:

The SDR is “basically the Esperanto, at best, of international currencies,” says Jeffrey Frankel, an economist at Harvard University, referring to the ill-fated attempt to create a common language. “It’s not at all used.”

Bergsten’s response:

There’s no real downside of speaking English. There is a downside of holding dollars if the supply gets too great… There is a very logical, coherent case for basing the international monetary system on an international asset.

Bergsten, by the way, seems doubtful that the SDR really will replace the dollar as the world’s reserve currency anytime soon. But he doesn’t say it’s inconceivable.

Stocks Rally Further in Run-up to EU Summit

MOSCOW — Global stocks enjoyed one of their best days in weeks on Tuesday ahead of a summit of European leaders that’s expected to be dominated by calls to boost economic growth.

Europe remains the focus of attention across all financial markets in the run-up to the June 17 Greek election that could go a long way to determining the country’s membership of the euro as well as the future of the single currency zone.

morrisonbonpasse

Making better use of SDR’s would be a step in the right direction, but what the world needs is a Single Global Currency, managed by a Global Central Bank within a Global Monetary Union and what the people of the world want is monetary stability.
The successes of the euro, and other monetary union currencies, show that monetary union is the best way to ensure monetary stability. The primary problem with the euro and
currencies of other monetary unions is that they still must co-exist
within the international multi-currency system itself where the value of those common currencies must still fluctuate in value against each other.
With a Single Global Currency, there are no such fluctuations, by definition. If 16 countries can use the same currency, why not 192?
The use of a Single Global Currency would eliminate currency account imbalances, eliminate the current foreign exchange trading expense of $400 billion annually, eliminate currency risk, eliminate currency fluctuations, eliminate the need for foreign exchange reserves (now totaling more than $4 trillion); and bring other benefits worth trillions, such as reducing the impact of global financial turmoil such as we are now experiencing.
The Single Global Currency Assn. (www.singleglobalcurrency.org)
promotes the implementation of a Single Global Currency by 2024, the 80th anniversary of the 1944 conference. That’s only 15 years away.
The world is moving toward a Single Global Currency through the creation, expansion and merger of regional monetary unions. Another route is through international monetary conferences proposals and agreements, such as were seen at Bretton Woods.
The challenge now is to reach that goal deliberately, as soon as possible with as little cost and as few crises as possible.
See the book, “The Single Global Currency – Common Cents for the World.”
We have asked Professor Frankel and the Peterson Institute of International Economics, of which Mr. Bergsten is Director, to conduct further research on the Single Global Currency. If the above claims are accurate, isn’t it worth examining more closely?
Morrison Bonpasse
Single Global Currency Assn.
Newcastle, Maine