By Gonzalo Vina
March 26 (Bloomberg) -- U.K. Prime Minister Gordon Brown said leaders from the Group of 20 nations will discuss currencies when they meet in London next week, days after China sparked a debate about the international role of the dollar.
“We will discuss currency issues,” Brown said at a press conference in Brasilia during a five-day tour to win support for his agenda at the April 2 meeting that he will host.
Chinese Central Bank Governor Zhou Xiaochuan called for the creation of a new international reserve currency. U.S. Treasury Secretary Timothy Geithner was forced to defend the dollar’s status after Chinese officials signaled concerns about the security of their dollar-denominated investments.
The leaders of the G-20 are aiming to find solutions to the financial and economic crises and looking for ways to avoid a repeat of them. Their finance ministers and central bankers made no joint comment on currencies when they met March 14.
Zhou this week urged the International Monetary Fund to expand the use of so-called special Drawing Rights and move toward a “super sovereign reserve currency.” Geithner sent the dollar sliding yesterday by saying he would consider China’s idea. The dollar rose again after he affirmed the greenback should remain the world’s chief currency.
SDR Currency
The value of SDRs are based on a basket including the dollar, the euro, the Japanese yen and the British pound, shielding them from swings in a single currency. One special drawing right was valued at $1.50549 yesterday, according to the IMF. Members can cash in SDRs for other currencies.
The SDR basket is reviewed every five years, with the next due within two years. The last one in November 2005 assigned the following weights based on the currencies’ roles in international trade and finance: 44 percent for the dollar, 34 percent for the euro and 11 percent each for the yen and the pound.
New York University Professor Nouriel Roubini, a former IMF economist, said in an interview today that the proposal for a global currency is “a pie in the sky idea.”
Vedic Perspective
760622gc.nv Conversations
Prabhupada: But you are intelligent. Why you are putting the forefather's words? You avoid it. That means you are cheating people. You do not believe in, but you still write it. That means cheating. Why do you write such things in which you do not believe? That means cheating. Hmm? What do you think? If you write something which you do not believe in, are you not cheating? That means cheating. You take word, you are giving a piece of paper, and it is written there, "one thousand dollars." That means you are cheating, in the name of God, he will accept you, that's all. If you say, "No, I don't want paper. Give me gold dollar," then you are finished. Your currency will be finished. Immediately there will be revolution, that "The government is cheating us." Actually it is cheating. What is the proof, value, of this paper, little paper? Simply "I promise to pay, governor and this..." But it is on trust only: "Yes, government will pay me." They'll never pay, but so long the government goes on, it will go on, that's all, cheating will go on. And as soon government fails, you throw in the street, no one will care for it. It has been practically proved in the last war, in Germany. There was scarcity of food, and those who had bunch of currency notes, they went for one piece of bread, so many thousand marks, "Give me." Nobody supplied. So the paper has no value, but if we believe, it has value, that's all. Otherwise what is the meaning of this paper, one thousand dollars? So it is a kind of cheating, "We trust in God; we are very good men. You trust in me."
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