Stiglitz's U.N. Panel: Replace the Dollar

The commission led by Nobel economist Joseph Stiglitz recommends a new global currency, disbanding the G-20, and other bold fixes

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A U.N.-appointed international panel led by Nobel laureate economist Joseph Stiglitz has urged a replacement of the dollar as the global currency, doing away with the Group of 20 financial organization, a global restriction on the size of banks, and a limit on bank transactions with tax havens.

The Stiglitz-led U.N. Commission of Experts, appointed in October to recommend how to overcome the global financial crisis, also proposed tight limits on financial risks that banks can assume. The group's report is to be issued Mar. 26, but a shorter, preliminary version has already been distributed.

The U.N. report joins numerous proposed financial-system fixes in recent days by world leaders, experts, and multilateral bodies. This latest report comes a week before the heads of state of the 20 largest industrial and developing nations meet to try to coordinate a response to the financial crisis.

Sharp Differences?

It won't be easy. The U.S. is continuing to push greater fiscal stimulus by all the countries, the European Union is urging decisive financial regulation, and China this week proposed replacing the dollar. The leaders argue forcefully that the media has exaggerated their differences. Yet, in one illustration of the sharp divide, Mirek Topolanek, the Prime Minister of the Czech Republic, which holds the European Union's rotating presidency, on Mar. 25 denounced the Obama Administration's stimulus and bailouts.

"All of these steps, these combinations and permanency, is the road to hell," Topolanek said. "The United States did not take the right path."

Although written by an 18-member panel of experts, the U.N. report often corresponds with ideas long advocated by the iconoclastic Stiglitz, who resigned as the World Bank's chief economist in 1999 after serious policy differences with the Clinton Administration.

The report says that its recommendations are the result of concluding that "the rapid spread of financial crisis from a small number of developed countries to engulf the global economy provides tangible evidence that the international trade and financial system needs to be profoundly reformed."