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Global Imbalances and the Key Currency Regime: The Case for a Commodity Reserve Currency

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  • Leanne Ussher

Abstract

This paper considers Kaldor's 1964 proposal for a commodity reserve currency (CRC) as a serious alternative to the current system, which has the US dollar as the world reserve currency. It argues that the reserve-currency status of the US dollar helped to create global imbalances and financial fragility pre-empting the current crisis. The primary goal of the CRC was to resolve the 1960 Triffin dilemma, which remains a problem today. Following a brief history of alternative monetary reform proposals, the CRC is outlined. Backed by a basket of 30 or so commodities, the CRC would fix their price index in terms of the international reserve and reduce the disorderly swings in individual commodity prices. Sovereign governments would be free to fix or float their national currencies to the CRC. With growing fears over global warming and national resource security, particularly in the world's poorest countries, the introduction of a CRC could reduce supply constraints, stabilize costs of production, promote global effective demand from the periphery and balance growth between periphery and core countries.

Suggested Citation

  • Leanne Ussher, 2009. "Global Imbalances and the Key Currency Regime: The Case for a Commodity Reserve Currency," Review of Political Economy, Taylor & Francis Journals, vol. 21(3), pages 403-421.
    • Handle: RePEc:taf:revpoe:v:21:y:2009:i:3:p:403-421
    DOI: 10.1080/09538250903073461
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    1. Spotlight G-20: We Need an International Commodity Reserve Currency
      by Triplecrisis in triple crisis on 2010-11-04 18:00:17

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    1. repec:clr:wugarc:y:2013:v:39i:4p:485 is not listed on IDEAS
    2. J. E. King, 2013. "A Brief Introduction to Post Keynesian Macroeconomics," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 39(4), pages 485-508.
    3. Svartzman, Romain & Dron, Dominique & Espagne, Etienne, 2019. "From ecological macroeconomics to a theory of endogenous money for a finite planet," Ecological Economics, Elsevier, vol. 162(C), pages 108-120.
    4. Zura Kakushadze & Willie Yu, 2019. "iCurrency?," Papers 1911.01272, arXiv.org, revised Nov 2019.
    5. Woods, John E, 2021. "Benjamin Graham on Buffer Stocks," OSF Preprints qdv3n, Center for Open Science.
    6. John Edward King, 2016. "Nicholas Kaldor after thirty years," PSL Quarterly Review, Economia civile, vol. 69(277), pages 107-277.

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