Time for a true global currency by José Antonio Ocampo

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The International Monetary Fund’s global reserve asset, the Special Drawing Right, is one of the most underutilized instruments of multilateral cooperation. Turning it into a true global currency would bring several benefits to the global economy and the international monetary system.

NEW YORK – This year the world commemorates the anniversaries of two key events in the development of the world monetary system. The first is the creation of the International Monetary Fund at the Bretton Woods conference 75 years ago. The second is the advent, 50 years ago, of the Special drawing rights (SDR), the IMF’s global reserve asset.

When it introduced the SDR, the Fund hoped to make it “the main reserve asset of the international monetary system”. This remains an unrealized ambition; indeed, the SDR is one of the most underused instruments of international cooperation. However, better late than never: transforming the SDR into a true global currency would bring several benefits to the global economy and monetary system.

The idea of ​​a global currency is not new. Before the Bretton Woods negotiations, John Maynard Keynes suggested the “bancor” as the unit of account for his plan for an International Compensation Union. In the 1960s, under the leadership of Belgian-American economist Robert Triffin, other proposals emerged to address the growing problems created by the dual dollar-gold system that had been put in place at Bretton Woods. The system finally collapsed in 1971. As a result of these discussions, the IMF approved the SDR in 1967 and included it in its statutes two years later.

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