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In March 2009, the governor of the Chinese Central Bank proposed a "super-sovereign reserve currency" that,...

In March 2009, the governor of the Chinese Central Bank proposed a "super-sovereign reserve currency" that, much like SDRs, would be independent of a particular country's currency. What would be the advantages and disadvantages of such a currency from a global perspective?

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Answer #1

Advantages

Super sovereign reserve plays a role in providing liquidity and supplementing member country's official reserves.

It serves as a unit of account of IMF and some international organizations.

It offers a potential claim on the freely usable currencies of the members of IMF.

These super sovereign reserve can be exchanged for any international currencies.

Disadvantages

Economic competition would be challenged due to more marketization responsibility.

Macroeconomic regulatory would be more difficult as the domestic economic shortfalls would be amplified.

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