UNCTAD for overhauling currency trade

A report released by the United Nations Conference on Trade and Development (UNCTAD) moots formation of a global reserve bank with a currency of its own. In addition, the report suggests that this global reserve bank will value the national currencies of member nations based on factors such as inflation, development, and purchasing power.

If implemented, this will bring in transparency in currency trade and bring down the speculation in some foreign currencies like dollars, which, at present is the main currency for holding foreign exchange reserves.
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The recent mortgage debacle in the US has shaken up the confidence of emerging nations such as China, Russia, Brazil, and India. China has ample dollar reserves, and has therefore, suggested creation of such a currency that would be above the currencies of all nations. Though these emerging nations hold substantial dollar reserves, they are not adequately represented at institutions such as IMF, which adversely affects the allocation of SDRs to them.

Heiner Flassbeck, one of the writers of the report, and also a director of UNCTAD, is of the opinion that such a measure, if taken would bring in stability in exchange rates. Of course, it would be as epoch making reform as the European Monetary System, or the Bretton Wood system.

The contemporary economic system was formed in 1944 through Bretton Woods agreement. It includes institutions such as the World Bank, and the International Monetary Fund.