Canadian-born Nobel prizewinning economist Robert Mundell thinks that the world is ripe for a new unit of account, and he even suggested a name for it – “device”.
Mundell, a professor of Columbia University in New York and one of the authors of the Eurozone, spelled out his idea at the Gaidar Forum in Moscow. He holds that in order to become an effective means of payment in the interests of the whole world, the future reserve currency should not be tied to any particular country. The “device”, as seen by Mundell, should be formed by merging the dollar, euro and yen into one unit of account that may exist in a purely virtual form or be converted into any of its three constituent currencies. Some experts find the project too bold to be achievable. Russian economist Mikahil Delyagin shares his view: "The dollar, euro and yen rest on three different economies with different growth dynamics. Therefore, attempts to create a common synthetic currency will run into big problems and will most likely fail. For some fundamental, rather technical reasons, a joint governing body involving Japan, the United States and Europe is impossible. So, it seems that Mr Mundell’s idea actually signals that the existing model has exhausted itself. The dollar is no longer able to cope with its function as a reserve currency." True, the dollar is losing its positions. But what are the alternatives? So far, only the euro meets the required standards. There is also the Chinese yuan, but it is still not fully convertible and therefore unable to challenge the dollar. Meanwhile, Russia has long been cherishing plans to make the ruble a reserve currency at least on a regional scale within the CIS framework. President Vladimir Putin thinks that the ruble has enough potential for that. Here is the opinion of Anatoly Aksakov, President of the Association of Regional Banks of Russia. "The ruble is already being used as a unit of account for transactions in some CIS member states. But this is not a systemic occurrence. For the ruble to become a fool-fledged regional currency, first, we need strengthen the economy and, second, to promote active use of the ruble in trade transactions with Ukraine, India and China. If these tasks and issues are solved, then the ruble will move faster towards becoming a regional currency." The ruble’s chances will strengthen considerably after Russia’s Central Bank switches to a free-floating exchange rate by 2015. Source: Voice of Russia
