Reading a report from The Financial Times (online), China has proposed a new global currency to replace the ever-dropping dollar. The reasoning behind this proposal is to have a currency that will remain stable throughout the course of the constant-fluctuations of the global economy.
With the recession at hand and the stock market plummeting, the United States is at a point where several other countries who trade with the U.S. may be worried for their own economic safeties. Zhou Xiaochuan, China's central bank governor, brought up the idea of special drawing rights. "Special drawing rights are assets and liabilities of the Fund provided to each member in proportion to its quota share in the institution. A member receiving SDR can transfer some or all of its allocation to another member country and receive credit in a convertible currency to spend on its domestic or international needs," - Ted Truman of the Financial Times.
These "SDR"s are supposedly the solution to the global recession.
If they are such effective solutions, why are they not put into action immediately?
I honestly don't know, but the G20 will. The G20 consists of 19 of the world's largest economies and the European Union; matters of global economic importance and matters pertaining to the international finance system are discussed at this meeting.
There will surely be much to discuss at the G20 meeting this year, in April.
Be sure to check back in April to see the resulting decisions of the G20.