Many countries are discussing to switch from the U.S. dollar as international reserve currency to a basket of currencies and commodities that would more accurately reflect world’s economic realities, and would be subject to less manipulation by central banks.
The Group of 20 leading economies have discussed the issue of Special Drawing Rights, a synthetic paper currency originated by the International Monetary Fund.
According to the U.K.s Telegraph, “Dominique Strauss-Kahn, managing director of the IMF, said in February 2009 that the world was ‘already in Depression’ and risked a slide into social disorder and military conflict unless political leaders resorted to massive stimulus. The IMF is already bailing out Pakistan, Iceland, Latvia, Hungary, Ukraine, Belarus, Serbia, Bosnia and Romania. This week Mexico became the first G20 state to ask for help. It has secured a precautionary credit line of $47 billion…
[Former British Prime Minister] Gordon Brown said it took 15 years for the world to grasp the nettle after Great Crash in 1929. ‘This time I think people will agree that it has been different,’ he said. The creation of a Financial Stability Board looks like the first step towards a global financial regulator.”
Ron Paul questions Bernanke about world currency
The Massachusetts Bay Colony experience
From a Northeastern University study: “Faced with an immediate need to pay expenses relating to a military action against Canada during King William’s War, on December 10,1690 the General Court authorized the issuing of £7,000 in public paper currency. This was the first public paper money issued in the history of Western civilization. Previously all currency had an intrinsic value of gold, silver or copper, much like the value of commodity items used for bartering. Now for the first time, the money itself had no intrinsic value other than the value of the paper on which it was printed. Rather, the value of the money came from the fact that it was backed by the colony. It was legislated as being equivalent to the denomination printed on the bill and would be accepted as the equivalent of hard currency by the colony. Within a few months it was further legislated that the paper money would be accepted by the government for tax payments at a 5% premium and that on demand bills could be turned into the treasury for the equivalent in hard currency, if the colony had such hard currency available.