Dollar under threat

Speaking at the annual meeting of the International Monetary Fund/World Bank, the United Nations Under-Secretary for Economic and Social Affairs, Sha Zukang, a Chinese national, urged the international community to replace the current dollar supremacy with a new global reserve currency.
He specified that "it is timely to emphasise that such a system also creates a more equitable method of sharing the seigniorage derived from providing global liquidity" - seigniorage, defined as the difference between the cost of printing money and the face value of the money.
Zukang also criticized the United States for abusing the dollar's role as a global reserve currency to fund its trade deficits, but did not criticise China for also abusing the system to stockpile trade surpluses and dollar reserves. There is a universal consensus that the US spearheaded the financial global crisis, triggering a worldwide recession and subsequently accumulated huge trade deficits, thereby weakening the entire global currency system.
The list of positive features of a global currency is exhaustive and include the elimination of: (i) transaction costs, resulting from trading from one currency to another, (ii) the balance of payments/current account problems of all countries, as these problems are related to the existence of multiple currencies, while within the monetary unions there are no balance of payment problems, (iii) the risk of currency failure, (iv) uncertainty attributed to exchange rate fluctuations, (v) misalignment of currencies with the objective of enhancing exports; and (vi) the need for monetary unions to maintain international reserves of other currencies. A global currency may also reduce global inflation to a planned rate and thereby, ensure low-loan interest rates and allow seigniorage benefits to be utilised by a global central bank.
The United Nations has been an advocate of the IMF's special drawing rights as the new global currency. There is obviously the issue of which agency, the United Nations or the IMF or some other international agency, would be the most appropriate recipient or distributor of seigniorage. There is evidence to suggest that the UN is not corruption-free and IMF's prescriptions have not always worked and neither has the Fund always been able to forecast an impending crisis accurately.
Besides, so argue critics of these institutions, multilateral financial institutions are staffed by international bureaucrats who, like their national counterparts, are involved in their career advancement which may, at times, be at cross-purposes with the requirements of their job and are heavily engaged in red-tapism that restricts their ability to take quick decisions. Many US analysts have referred to the call by Zukang as anti-American.
The announcement by Iran last month that it would no longer keep any of its foreign exchange reserves in dollars, but instead, in a basket of currencies including the yen, the euro, gold, etc may have played a part in igniting the debate on global currency. A news report carried by a British newspaper alleged that China, Russia, Japan and France are behind the move to replace the dollar with a basket of currencies for oil purchases.
The implication was that all the Gulf Cooperating Countries (GCC) were also complicit in this move. All the concerned countries have denied this vociferously, including the GCC. Be that as it may, there is sufficient evidence that a monetary union does have several advantages, the Euro as a case in point. But in a world where power dictates, the results of a proposal for a global currency is a long way from being implemented.