US President Barack Obama has publicly opposed Russia’s initiative for the first time during his presidency. Obama rejected Russia’s idea to replace the dollar with a new international currency, which immediately led to the growth of the US dollar on the international financial market.
Russia put forward a suggestion to the IMF to look into the opportunity to create a supernational reserve currency which would be issued by international financial institutions. Russia also suggested a diversification of the currency structure of reserves, operations of national banks and international financial organizations.
Many countries, including Iran, China, Kazakhstan and several Arab states, supported Russia’s idea to replace the dollar with a new currency. The governments of those countries believe that the doubtful dollar settlement in the oil industry will soon become a matter of the past.
John Lipsky, the first deputy managing director of the IMF, said that Russia’s suggestion was worthy a detailed analysis.
Russia’s suggestion to replace the dollar with Special Drawing Rights would help the world extricate from the economic crisis and reorganize the global financial system afterwards.
"I don't believe that there's a need for a global currency. The dollar is extraordinarily strong right now,” Obama said in a statement. The US president believes that investors consider the US political system stable and view the US economy as the strongest economy in the world.
Obama is certain that any conclusions about the decline of the global popularity and demand of the dollar are premature. The US president also believes that the criticism of the US government, which tries to overcome the consequences of the world economic crisis, is groundless. Washington has been retrieving its global leadership lately, Obama said.
Barack Obama believes that the US economy has been moving in the right direction and starts to extricate from the crisis. The Americans need to be confident of their strength to make it happen as quick as possible, he said.
Obama likened the USA to a big ocean liner, not a speed boat, and set out a hope that his liner would find itself in a better place owing to the decisions, which his administration would be taking during the forthcoming four years.
Needless to say that the financial administration of the United States supported their president and strongly rejected the idea of replacing the dollar with a new global currency. U.S. Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke stated that they would categorically renounce the USA moving away from the dollar.
Of course, there is nothing surprising about the fact that the USA is showing such strong resistance to the idea of the new currency. The United States dominates the world’s economy owing to its control over the issuance of the dollar, the world reserve currency. If a new currency appears in the world, it will be issued by international financial institutions. The United States will have to go into the wilderness, if it happens, which will obviously cut its influence on global economic and political affairs.