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Fallout: The Financial Crisis

U.N. wants to move away from dollar

Janet Babin Mar 20, 2009
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Fallout: The Financial Crisis

U.N. wants to move away from dollar

Janet Babin Mar 20, 2009
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TEXT OF STORY

Steve Chiotakis: The U.S. dollar is taking a beating. Not that it’s been Mr. Popular lately anyway, but ever since the Federal Reserve this week announced its intent to pump more money into the American economy, commodity prices have gone up and the dollar’s value down. Now, a U.N. panel may recommend the dollar be ditched as the world’s top reserve currency. From North Carolina Public Radio, here’s Marketplace’s Janet Babin.


Janet Babin: The Fed’s decision to pump a trillion more dollars into the U.S. economy has other nations worried about whether the dollars they hold will drop in value.

Typically, the world’s central banks have about two-thirds of their cash reserves in dollars. A U.N. panel next week will recommend that the banks consider diversifying.

But currency expert Marc Chandler at Brown Brothers Harriman says the U.N. has no real power over the world’s central banks and what kind of cash they decide to hang onto:

Marc Chandler: Countries choose that themselves. I would say that there is no evidence whatsoever that central banks as a whole have removed one single dollar from reserves, despite people talking about this.

Chandler says countries like Russia are pulling for the U.N. to ditch the dollar because it would help them shore up their own currency. Even though the dollar may weaker a bit more, Chandler says there’s no clear alternative for the world’s banks to turn to.

I’m Janet Babin for Marketplace.

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