Arthur Laffer, an economic advisor to President Reagan, says the idea of a new world reserve currency has merit.
Chinese officials recently proposed the concept.
“What China is doing is amazing,” Laffer told Bloomberg TV. “China is taking a far better leadership role than I ever would have imagined.”
China’s suggestion “is clearly in the right direction,” Laffer says.
“What’s happening at the Fed in the U.S. with Bernanke and the dollar is that the U.S. is losing leadership. China is gaining leadership.”
With China becoming a bigger player in the world economy, “there should be a more global currency than just the U.S.,” Laffer says.
“I would love to see us moving toward a global currency. We shouldn’t do it today. But if we did something over the next 10 to 15 years, I would endorse it fully.”
Laffer expressed opposition to the Obama administration’s attempt to coordinate global economic stimulus.
“One of the things we don’t want from the G20 [meeting in London this week] is an agreement on coordinated policy,” Laffer says.
“The whole world survives best by diverse policies and finding out which ones work
and which ones don’t.”
Not everyone shares Laffer’s view about a new currency. The special drawing right (SDR) that China suggested is “basically the Esperanto, at best, of international currencies,” Harvard economist Jeffrey Frankel told The Wall Street Journal.
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