UNITED NATIONS, July 1 (UPI) -- A U.N. committee is the latest advocate of dumping the U.S. dollar in favor of a replacement currency though it doesn't say -- or know -- which to turn to.
The dollar has been challenged as a global currency for a variety of reasons -- from populist grandstanding to polarized political critics of the United States seeking to go separate ways.
Former Iraqi President Saddam Hussein opposed the dollar's use for the oil trade and Iran, before the eurozone crisis, wanted the dollar replaced by the European common currency for hydrocarbon transactions.
The latest clamor for displacing the dollar as a global currency rose after the 2008 economic downturn which, the U.N. committee said, showed the U.S. currency was ill-equipped to defend international trade.
The U.N. Department of Economic and Social Affairs, in a report, called the dollar an unreliable international currency that should be replaced by a more stable system.
"The dollar has proved not to be a stable store of value, which is a requisite for a stable reserve currency," the report said.
Countries with massive dollar reserves have seen their funds undervalued as a result of the dollar's troubles and impacted adversely on their import trade.
The report cited support for a standardized international system for liquidity transfer that would remove dependence on storing up reserves in a particular currency. Instead, it backed special drawing rights made up of a basket of currencies.
Under an existing system, the value of special drawing rights is determined by the International Monetary Fund. The IMF also can made adjustments in currency rates in response to market fluctuations.
The United Nations says it supports the initiatives and hopes that finding alternatives to the dollar will help sustain the international trade and financial systems and allow
less-developed countries to participate more fully into the global economy.
Getting "back on track" will require significant reforms in global economic governance and new thinking to put the world on a more sustainable path of development, said the report.
"This year's report looks at the prospects for post-crisis global development and concludes that a major rebalancing of the global economy is needed to make it sustainable," said Rob Vos, the director of the development policy and analysis division of the Department of Economic and Social Affairs.
"To that end, it argues for much more effective mechanisms of global economic governance, requiring a major overhaul of the existing ones," he told reporters at the launch of the report.
Vos said many of the global crises in recent years, including fuel and food crises, were caused to a large extent by systemic failures in the global economy and weaknesses in the mechanisms for global governance.