Bank Of Canada Governor Admits Talk Of Dollar To Be Replaced
OTTAWA — Bank of Canada Governor Mark Carney warned on Friday that failure to implement promised G20 reforms could jeopardize the global economic recovery and, in turn, worsen the outlook for Canada. In a speech highly critical of global leaders’ track record in coordinating policies, Carney blasted proposals to replace the U.S. dollar as the world’s reserve currency. He said governments should restore their faith in the current international monetary system by making adjustments, including a commitment to more flexible exchange rates in countries like China. "The current functioning of the international monetary and financial systems is beginning to force a wrenching real adjustment across major economies," Carney said in the prepared text of a speech he was to deliver in Calgary, Alberta. (snippet)
SDRS OR DOLLARS France aims to use its G20 presidency next year to discuss Chinese proposals to use the International Monetary Fund’s Special Drawing Rights more widely as a reserve currency. But Carney said there is no viable short-term alternative to the U.S. dollar as the world’s reserve currency, and he urged G20 members to keep up the momentum on more mundane reforms rather than trying to reform the system too radically. "There is no miracle cure," Carney said. "Faith is required, but not in a barbarous relic or a utopian global central bank. Rather, countries must restore their faith in the adjustment process under the current system." He said G20 discussions will inevitably include debate of China’s controls on its yuan currency, widely seen as giving Chinese exports an unfair advantage.