UN: Dollar Doesn’t Make SenseSeptember 18, 2009 - 4:25 PM | by: David Lee Miller
Who doesn’t like the US dollar? The United Nations, that’s who. This is the same United Nations that gets the bulk of its funding from Uncle Sam.
In a recent report a UN agency, the United Nations Conference on Trade and Development (UNCTAD) proposed replacing the dollar as the standard for global transactions with a new form of worldwide currency.
For decades the greenback has been used to price virtually all commodities. Since the end of the Second World War almost all countries have US dollar backed securities on reserve.
If the UN gets it’s way, all that could change.
Analyst Nile Gardiner of the Heritage foundation says the UN plan “would be a huge blow to American strategic power.”
In addition to a loss of prestige the US economy could suffer if dollars flood world markets.
According to Gardiner the UN plan is a “direct assault by the UN on American global power” from an organization with a “long track record of anti-Americanism.”
The principal author of the UN report, UNCTAD’s Chief Economist, Henier Flassbeck denies any anti-American sentiment, and calls Gardiner’s criticism “ridiculous.” According to Flassbeck demand for the US dollar is “irrational.” He argues the creation of an alternative financial instrument would provide more stability during times of economic upheaval. The new financial instrument proposed in his report would be pegged to a basket of different currencies to minimize what he called any “huge monetary shock.”
This is not the first time replacing the dollar as a global reserve currency has been put forth. China, Russia and other countries have discussed similar ideas. But as the US deficit grows and confidence in the dollar wanes, some analysts say the idea of a new world currency could be gaining momentum.
Replacing the dollar is not expected to happen anytime soon. Even the UN report says change will “take some time, not the least because it requires international consensus and multilateral institution building.”
The ultimate test of the dollar’s survivability could be if the day arrives when the UN says “no thanks” to accepting US currency.