BANCOR - Is it a New Global Currency?

 The people who follows the IMF knows that It gets what it usually wants. It could be the same in case of New Global Currency knowns as "Bancor". In April,13, 2010 a paper entitled  “Reserve Accumulation and International Monetary Stability” by the Strategy, Policy and Review Department of the IMF recommends that the world adopt a global currency called the "Bancor" and that a global central bank be established to administer that currency. 

Many people thought that it is some hype and rumour; which is not True. The Proposal is already submitted and now the base work for implementation is going on.

People may wonder from where this term Bancor had evolved?

If people who are following the IMF website and people who have knowledge of "Bretton Wood Agreements" they would know from where this term have been evolved. Anyhow, here is a brief history of the term "Bancor".

The term evolved way back in 1940's (I think exactly between 1942-44) when John Maynard Keynes made a proposal to have a world reserve currency - where he was conceptualising the term called "Bancor"- administered by a central bank vested with the possibility of creating money and with the authority to take actions on a much larger scale.

The Paper gives answer for the question Why bancor? Few excerpts as follows: 

A global currency, bancor, issued by a global central bank would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy.

It is believed that Bancor would play as a Nominal anchor. As a stable store of value, bancor could serve as a global nominal anchor. The variability of traded goods prices that is currently related to exchange rate volatility would be reduced.

Once liquid markets for bancor-denominated instruments exist and bancor-denominated transactions are at a par with or exceed transactions in other currencies (i.e., in a bancor-based system), bancor-denominated debt of the sovereign with the highest credit rating could serve as the global risk-free asset, off of which all risky assets are priced.

The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present. If bancor were to circulate as a common currency, then current account imbalances among the adopting economies would reflect structural rather than monetary considerations.

Perception:

IMF is trying to shift for common global currency. But, how far this help the world from any crisis is really a big question. The Bancor has its own advantage as well as disadvantage. When it comes to implementation and practicality then I see only more crisis rather than stablility. I still need to go through full paper before I express my views on this "Bancor" (not on keynes term). Let us wait and see how this Bancor as a global currency evolves and comes to implementation.