**UN Proposes New Multilateral Regime to stave off currency speculation ...

March 21, 2009 (older article explains currency plans)

This is the plan that has been proposed for the future of our economy . In a few months, we'll probably see a depreciation of the dollar. What is going to happen is an adjustment will be made by the IMF and those in charge of the countries finances. Multiple currencies will either revalue or devalue to bring each country in line (on par) with one another. Immediate action needs to take place in order to save the worlds' economies from total collapse according to the United Nations. This has been "in the works" for years (2002) and since our economy is on the verge of complete failure, this has to be done ASAP. kel.

~Snip from UNCTAD:

UN proposes new multilateral regime to stave off currency speculation.

One of the most innovative ideas to reform the global monetary and financial architecture discussed during the International Follow-up Conference on Financing for Development in Doha was a new multilateral regime to stave off currency speculation and provide the policy space for all countries to pursue expansionary fiscal and monetary policies to protect jobs and their domestic economy (counter-cyclical measures) in the face of a recession or financial crisis.

This is one of the key proposals that a Task Force set up by the United Nations Conference on Trade and Development (UN) will present in mid-February 2009. This proposal was discussed at a number of side events at Doha and was the subject of an interview by NGLS with UN Chief Macroeconomist Heiner Flassbeck (see below).

Continues ...read more ..

The issue was clearly framed at an event organized by UN and the Dutch Government on 30 November on “Financial crises, global imbalances and national policy space.”At the meeting, a senior representative of the International Monetary Fund (IMF) insisted that not all countries were in a position to pursue counter-cyclical measures by running large budget deficits. There was no “one-size-fits-all” in responding to the global financial and economic crisis.

Some countries (such as the United States and China) had the lee-way to do so, but others could not afford such measures without being fiscally irresponsible and eventually making matters worse for their economy. For them, “fiscal retrenchment” was inevitable.Overcoming a fundamental asymmetry in the global economy.

At the meeting, Mr. Flassbeck said it was essential to examine this problem from a broader perspective - namely that under the current system, some countries were not allowed to “print unlimited amounts of money” or run large budget deficits without causing their currency to “fall down a very deep hole.”This represented a fundamental asymmetry in the global economy that was in no one’s interest.

In effect, countries who are the victims of currency speculation, or “carry-trade” (portfolio investments based on borrowing in low-yielding currencies and investing in high-yielding ones) are forced to take “pro-cyclical” measures (such as interest rate hikes or public budget cuts or freezes) that aggravate the crisis in the real economy in order to reassure international currency speculators.

This perverse phenomenon underlined the importance of UNCTAD’s proposal to develop a multilateral framework for an automatic stabilization of real exchange rates that would defeat the purpose of any speculative attack on a currency.

This would enable all countries to regain the policy space needed to act in the interest of the real economy and avoid “beggar-thy-neighbour” policies or “devaluation wars” reminiscent of the 1930s. While this proposal deals with the realm of finance - instituting new rules to manage exchange rates - it is intimately related to a primary factor affecting trade relations.

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