George Soros offers own solution to financial crisis

PanARMENIAN.Net - George Soros, Chairman of Soros Fund Management suggests issuing new currency to help third world countries fight financial crisis.



As Soros specifies in his article, world institutions are currently facing a new problem "to protect third world countries from U.S.-created storm. Futures of World Bank and IMF depend on this task's success. They will practically lose their importance, if unable to offer considerable support".



Assistance is needed to protect third world countries' financial systems and give their governments a chance to introduce anticyclical budget policy. For financial systems protection, countries are to be heavily subsidized for a short period. To introduce anticyclical policy, long term financing is necessary. Yet IMF funds (aprox. $200 billion) are not nearly enough to offer systematic and substantial help.



To reach these goals George Soros suggests issuing new currency. Derivative currency was already in circulation to support Special Drawing Rights mechanism (SDR) created in 1969. To activate it, 85 percentile approval of IMF members is required. In the past, U.S. was opposed to its SDR circulation. Additional currency creation is the best response to credit market collapse. This is internal practice for USA, so Soros offers to expand it throughout the globe.



The financier is confident that SDR won't affect short term liquidity, yet will be useful to third world countries in anticyclical budget policy implementation, if the rich sacrifice their SDR limits for poor countries. "International institutions will control intentional usage of these means. If SDR becomes widely used, the unselfish act of rich countries will truly serve their interests by boosting World Economy and supporting their export markets", says the article published in Vedomosti.