What to Look for in Your FX Provider
An automated Forex trading system can help a new trader practice discipline. The Forex market trades 24 hours a day and provides excellent leverage for every investor. Unfortunately, it can be challenging for the average investor to catch the trades they want if they need to get sleep in their time zone. Forex markets can move outside of their usual active timeframes. Without an automated trading solution, many investors miss valuable trades.
This is where auto trading comes in. Usually, the solution will be provided by your broker. You’ll have to customize your software to follow the methodology you use in your traders. With the right automated Forex trading software, you don’t have to focus on every detail – you just have to set it up in your application. Your software should place trades, monitor the markets, catch directional trades, and place the limits and stops once a trade is live. An automated system frees you up from the minor details and lets you focus on other areas of your trading strategy.
What to look for in your automated Forex trading solution:
• Does the automation allow you to trade multiple strategies?
• Is it easy to install and set up?
• Does the provider have online and live telephone support?
• Can it utilize multiple strategies in different time frames?
• Does it automatically place your orders early in the exchange queue?
• Can it trade multiple accounts?
An automated trading solution can help eliminate stress and avoid stalled decision making by processing all complex factors and differentials with quick and logical precision. Before selecting a provider, it is still important to test the system out on your own. Ask your broker for a demo of the software and take time to tweak the settings to make sure it makes decisions according to your strategy. The right features and options in your automated Forex trading software can allow you to customize your trading experience – even while you’re away from the computer
source: http://www.forexdollaryen.com/Page/Automated-Trading.htm
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3/29/09
Forex Charts
Understanding 3 Basic Forex charts
How to use them to see trends in Forex rates
You can view Forex charts to navigate trends in a variety of formats. Usually, your analysis tools will by supplied by your broker. Come traders also purchase software solutions for technical analysis online.
There are many types of charts for the Forex trader to use, but this article is going to give you insight into the basics. If you are familiar with the stock market, you may be familiar with some of these charts and how they are used.
When reading this article, you may find it helpful to use your charting software to generate some charts so you can learn as you go along.
The Forex Candlestick Chart
Each “candlestick” is composed of a vertical rectangle and/or vertical lines. The lines are actually more like blocks that look like a candlestick. This is the most common chart used to see trends in Forex rates. When looking at a candlestick chart, make note of the following:
• The rectangle – is it black or white? The rectangle color indicates the open and close of a day or trading periods. It may be colored black or white. It depends on the relationship of the open and close to each other. A white body indicates that the asset price, at the end of the day, was higher than it was when it opened. A black body signifies a closing price lower than the price at the opening of the day. The lines, often called shadows, show the high and low of the day.
• Candlestick lengths – how far do they range? The lengths of each candlestick's rectangle and shadows show the range of trading in a day. This can give a trader a good view of each day relative to previous and following ones.
• The patterns – what do they mean? Patterns of candlesticks, sometimes called constellations, maybe interpreted as an indication of human trading activity.
source: http://www.forexdollaryen.com/Page/Forex-Charts.htm
How to use them to see trends in Forex rates
You can view Forex charts to navigate trends in a variety of formats. Usually, your analysis tools will by supplied by your broker. Come traders also purchase software solutions for technical analysis online.
There are many types of charts for the Forex trader to use, but this article is going to give you insight into the basics. If you are familiar with the stock market, you may be familiar with some of these charts and how they are used.
When reading this article, you may find it helpful to use your charting software to generate some charts so you can learn as you go along.
The Forex Candlestick Chart
Each “candlestick” is composed of a vertical rectangle and/or vertical lines. The lines are actually more like blocks that look like a candlestick. This is the most common chart used to see trends in Forex rates. When looking at a candlestick chart, make note of the following:
• The rectangle – is it black or white? The rectangle color indicates the open and close of a day or trading periods. It may be colored black or white. It depends on the relationship of the open and close to each other. A white body indicates that the asset price, at the end of the day, was higher than it was when it opened. A black body signifies a closing price lower than the price at the opening of the day. The lines, often called shadows, show the high and low of the day.
• Candlestick lengths – how far do they range? The lengths of each candlestick's rectangle and shadows show the range of trading in a day. This can give a trader a good view of each day relative to previous and following ones.
• The patterns – what do they mean? Patterns of candlesticks, sometimes called constellations, maybe interpreted as an indication of human trading activity.
source: http://www.forexdollaryen.com/Page/Forex-Charts.htm
3/27/09
Taking Profits
So much time is spent on entering a trade. Today I want to focus on some exit strategies. This is not a full Fibonacci course, so if you don't understand the basics I suggest that you visit my website for help with those aspects.
Human nature makes trading very challenging. Sometimes you want to exit a trade too quickly when it goes against you, and to cling on to a winner too long. Too often a winning trade will reverse, taking back most of your profits, or even going into a loss. On the other hand if you exit too soon, you risk missing some big profits. You may find that you're sitting on the sidelines while the market continues well beyond your exit.
In this lesson I'll show you how to bank those profits before they turn against you.
First look at this FOREX chart (JPY hourly chart).
Let's imagine that you were clever (or lucky) enough to enter long near point "A". You're feeling pretty good when price reaches "B". So good that you don't want to exit, because the up-thrust just before "B" give the impression that this market wants to go further.
Before you know it, the market reverses and heads towards "C". Right at "C" you get scared and bail out with a little profit. Not much profit compared to exiting at point "D" or even at "F".
You exit near "C", and feel relieved until you see the market heading (thrusting) up to point "D". You stop kicking yourself long enough to enter when it breaks above "B", just a little before the high at "D".
Soon after your entry near "D", the market retraces to "E", and on the way breaks below the high of "B". Breaking below the high of "B" feels scary because you're thinking this chart could be back at "A" in a flash. So you exit at "E" licking your wounds with a loss in this trade.
You start to notice more frustration now, when you enter somewhere between "E" and "F". You're feeling good near "F", but then the chart dives to "G" and you're stunned! This is a losing day for your account, and it's beginning to hurt.
By this time you feel like the whole market is watching your trades, and they're doing exactly the opposite of what you are doing. You start thinking that they wait for you to enter before they slam you and empty your account..
You have wasted your emotional capital, you don't want to trade any more. You don't have the stomach to consider shorting the rally after "G" to take profits at "H".
There must be a better way!
Banking those profits.
You should seriously consider using profit targets to improve your trading performance. There are several ways to do this, my preference is to use Fibonacci techniques.
On the following chart, I have added a Fibonacci expansion using points "A, B, C". This provides us with three profit targets. They are at 116.52, 116.93, and 117.59, see the blue arrows.
If I add another Fibonacci expansion using points "C, D, E", then two more profit targets are added, at 116.87 and at 117.22 . I have not added those studies to the chart, in order to keep things simple for now. You will notice the 116.87 target is quite close to the profit target at 116.93 in the above paragraph. And the 117.22 target is remarkably close to the swing high at 117.32 which is between E and F. We'll ignore those for simplicity, just remember that Fibonacci is excellent at predicting probable turning points.
The trick with Fibonacci is that the market sometimes blows right through a profit target. So what do you do then? Simple - you stay in the trade! But sometimes the market reverses shortly after a profit target.
Sometimes the market respects a certain Fibonacci level, sometimes not. Some Fibonacci levels are "stronger" than others. Advanced Fibonacci techniques are able to help determine which have more validity, but that is beyond the scope of this lesson. What mechanism could you use to exit the trade?
One practical method of timing a trade is to use an oscillator. Another is to use a moving average. When an oscillator shows a decline of momentum, or when price crosses a moving average, you could exit the trade. Let's explore the "oscillator" option in the following chart.
In that chart, I have removed the Fibonacci studies (less clutter), leaving the blue arrows for profit targets. At the bottom I have added the default Stochastic per E*Signal charting software. I have added a red vertical line whenever the Stochastic "fast" blue line crosses the "slow" red line just after price rises above the Fibonacci target. If you exited when price reached those vertical red lines, you'd be a happy trader!
Already you can see the potential of using profit targets with an exit trigger.
You may want to research the following:
* Possibly exiting a partial position at each profit target.
* Consider entering long again on the dips, when the chart begins to rally again.
* Consider using multiple time-frames, perhaps Fibonacci studies on the hourly chart, and exit triggers on 5 minute charts.
If you would like to become an expert at trading with Fibonacci, see my trading seminars at my website.
- Neal Hughes
http://www.fibmaster.com
source:
http://www.goforex.net/taking-profits.htm
Human nature makes trading very challenging. Sometimes you want to exit a trade too quickly when it goes against you, and to cling on to a winner too long. Too often a winning trade will reverse, taking back most of your profits, or even going into a loss. On the other hand if you exit too soon, you risk missing some big profits. You may find that you're sitting on the sidelines while the market continues well beyond your exit.
In this lesson I'll show you how to bank those profits before they turn against you.
First look at this FOREX chart (JPY hourly chart).
Let's imagine that you were clever (or lucky) enough to enter long near point "A". You're feeling pretty good when price reaches "B". So good that you don't want to exit, because the up-thrust just before "B" give the impression that this market wants to go further.
Before you know it, the market reverses and heads towards "C". Right at "C" you get scared and bail out with a little profit. Not much profit compared to exiting at point "D" or even at "F".
You exit near "C", and feel relieved until you see the market heading (thrusting) up to point "D". You stop kicking yourself long enough to enter when it breaks above "B", just a little before the high at "D".
Soon after your entry near "D", the market retraces to "E", and on the way breaks below the high of "B". Breaking below the high of "B" feels scary because you're thinking this chart could be back at "A" in a flash. So you exit at "E" licking your wounds with a loss in this trade.
You start to notice more frustration now, when you enter somewhere between "E" and "F". You're feeling good near "F", but then the chart dives to "G" and you're stunned! This is a losing day for your account, and it's beginning to hurt.
By this time you feel like the whole market is watching your trades, and they're doing exactly the opposite of what you are doing. You start thinking that they wait for you to enter before they slam you and empty your account..
You have wasted your emotional capital, you don't want to trade any more. You don't have the stomach to consider shorting the rally after "G" to take profits at "H".
There must be a better way!
Banking those profits.
You should seriously consider using profit targets to improve your trading performance. There are several ways to do this, my preference is to use Fibonacci techniques.
On the following chart, I have added a Fibonacci expansion using points "A, B, C". This provides us with three profit targets. They are at 116.52, 116.93, and 117.59, see the blue arrows.
If I add another Fibonacci expansion using points "C, D, E", then two more profit targets are added, at 116.87 and at 117.22 . I have not added those studies to the chart, in order to keep things simple for now. You will notice the 116.87 target is quite close to the profit target at 116.93 in the above paragraph. And the 117.22 target is remarkably close to the swing high at 117.32 which is between E and F. We'll ignore those for simplicity, just remember that Fibonacci is excellent at predicting probable turning points.
The trick with Fibonacci is that the market sometimes blows right through a profit target. So what do you do then? Simple - you stay in the trade! But sometimes the market reverses shortly after a profit target.
Sometimes the market respects a certain Fibonacci level, sometimes not. Some Fibonacci levels are "stronger" than others. Advanced Fibonacci techniques are able to help determine which have more validity, but that is beyond the scope of this lesson. What mechanism could you use to exit the trade?
One practical method of timing a trade is to use an oscillator. Another is to use a moving average. When an oscillator shows a decline of momentum, or when price crosses a moving average, you could exit the trade. Let's explore the "oscillator" option in the following chart.
In that chart, I have removed the Fibonacci studies (less clutter), leaving the blue arrows for profit targets. At the bottom I have added the default Stochastic per E*Signal charting software. I have added a red vertical line whenever the Stochastic "fast" blue line crosses the "slow" red line just after price rises above the Fibonacci target. If you exited when price reached those vertical red lines, you'd be a happy trader!
Already you can see the potential of using profit targets with an exit trigger.
You may want to research the following:
* Possibly exiting a partial position at each profit target.
* Consider entering long again on the dips, when the chart begins to rally again.
* Consider using multiple time-frames, perhaps Fibonacci studies on the hourly chart, and exit triggers on 5 minute charts.
If you would like to become an expert at trading with Fibonacci, see my trading seminars at my website.
- Neal Hughes
http://www.fibmaster.com
source:
http://www.goforex.net/taking-profits.htm
Forex Broker Guide
Introduction
The following is a list of questions you may like to consider before opening an account. You can use this checklist to narrow down your selection of companies that fit your requirements. You may also wish to refer to the forex broker ratings page on this site to read about traders unique experiences with particular brokers.
The following links will also give you some background information on U.S. FCM's (Futures Commission Merchants).
* Selected Financial Data for FCM's
* NFA Background Affiliation Status
1. Word of Mouth
* What do other traders say about the broker?
* What is their customer service like?
2. Customer Protection
* Is the broker regulated?
* What regulatory organisation are they registered with and what protections does it afford you?
* Are client funds insured against fraud?
* Are client funds insured against bankruptcy?
3. Execution
* What business model do they operate? i.e. Are they a Market Maker[?], ECN[?] or no-dealing desk broker[?]?
* How fast is their order execution?
* Are orders manually or automatically executed? [?]
* What is the maximum trade size before you have to request a quote?
* Are all clients trades offset?
4. Spread [?]
* How tight is the spread?
* Is it fixed or variable?
5. Slippage [?]
* How much slippage can be expected in normal and fast moving markets?
6. Margin [?]
* What is the margin requirement? e.g. 0.25% margin = max 400:1 leverage [?]), 0.5% margin = max 200:1 leverage, 1% margin = max 100:1 leverage, 2% margin = max 50:1 leverage, etc.
* Does the margin requirement change for different currency pairs or days of the week?
* At what point will the broker issue a margin call?
* Is it the same for standard and mini accounts? [?]
7. Commissions
* Do they charge commissions? (Most market makers' commissions are built into the spread)
8. Rollover Policy [?]
* Is there a minimum margin requirement in order to earn rollover interest?
* What are the swap rates like for going long or short in a particular currency pair?
* Are there any other conditions for earning rollover interest?
9. Trading Platform
* How intuitive and functional is it to use?
* Are there many disconnections during trading hours?
* How reliable is it during fast moving markets and news announcements?
* How many different currency pairs can you trade?
* Do they offer an Application Programming Interface (API) to allow you to automate your trading system?
* Does it offer any other special features? (e.g. One click dealing, trading from the chart, trailing stops, mobile trading etc.)
10. Trading Account
* What is the minimum balance required to open an account?
* What is the minimum trade size?
* Can you adjust the standard lot size traded? [?]
* Can you earn interest on the unused margin balance in your account?
Related Links:
* General Forex Guide
* Preferred Forex Brokers
* Forex Broker Ratings
* Forex Broker Comparison
* Forex Broker List
source:
http://www.goforex.net/forex-broker-guide.htm
The following is a list of questions you may like to consider before opening an account. You can use this checklist to narrow down your selection of companies that fit your requirements. You may also wish to refer to the forex broker ratings page on this site to read about traders unique experiences with particular brokers.
The following links will also give you some background information on U.S. FCM's (Futures Commission Merchants).
* Selected Financial Data for FCM's
* NFA Background Affiliation Status
1. Word of Mouth
* What do other traders say about the broker?
* What is their customer service like?
2. Customer Protection
* Is the broker regulated?
* What regulatory organisation are they registered with and what protections does it afford you?
* Are client funds insured against fraud?
* Are client funds insured against bankruptcy?
3. Execution
* What business model do they operate? i.e. Are they a Market Maker[?], ECN[?] or no-dealing desk broker[?]?
* How fast is their order execution?
* Are orders manually or automatically executed? [?]
* What is the maximum trade size before you have to request a quote?
* Are all clients trades offset?
4. Spread [?]
* How tight is the spread?
* Is it fixed or variable?
5. Slippage [?]
* How much slippage can be expected in normal and fast moving markets?
6. Margin [?]
* What is the margin requirement? e.g. 0.25% margin = max 400:1 leverage [?]), 0.5% margin = max 200:1 leverage, 1% margin = max 100:1 leverage, 2% margin = max 50:1 leverage, etc.
* Does the margin requirement change for different currency pairs or days of the week?
* At what point will the broker issue a margin call?
* Is it the same for standard and mini accounts? [?]
7. Commissions
* Do they charge commissions? (Most market makers' commissions are built into the spread)
8. Rollover Policy [?]
* Is there a minimum margin requirement in order to earn rollover interest?
* What are the swap rates like for going long or short in a particular currency pair?
* Are there any other conditions for earning rollover interest?
9. Trading Platform
* How intuitive and functional is it to use?
* Are there many disconnections during trading hours?
* How reliable is it during fast moving markets and news announcements?
* How many different currency pairs can you trade?
* Do they offer an Application Programming Interface (API) to allow you to automate your trading system?
* Does it offer any other special features? (e.g. One click dealing, trading from the chart, trailing stops, mobile trading etc.)
10. Trading Account
* What is the minimum balance required to open an account?
* What is the minimum trade size?
* Can you adjust the standard lot size traded? [?]
* Can you earn interest on the unused margin balance in your account?
Related Links:
* General Forex Guide
* Preferred Forex Brokers
* Forex Broker Ratings
* Forex Broker Comparison
* Forex Broker List
source:
http://www.goforex.net/forex-broker-guide.htm
Essential Elements of a Successful Trader
Courage Under Stressful Conditions When the Outcome is Uncertain
All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.
You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.
However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.
Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.
Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.
The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.
For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.
The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).
So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.
Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?
If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.
Patience to Gain Knowledge through Study and Focus
Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.
To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.
source:
http://www.goforex.net/essential-elements.htm
All the foreign exchange trading knowledge in the world is not going to help, unless you have the nerve to buy and sell currencies and put your money at risk. As with the lottery “You gotta be in it to win it”. Trust me when I say that the simple task of hitting the buy or sell key is extremely difficult to do when your own real money is put at risk.
You will feel anxiety, even fear. Here lies the moment of truth. Do you have the courage to be afraid and act anyway? When a fireman runs into a burning building I assume he is afraid but he does it anyway and achieves the desired result. Unless you can overcome or accept your fear and do it anyway, you will not be a successful trader.
However, once you learn to control your fear, it gets easier and easier and in time there is no fear. The opposite reaction can become an issue – you’re overconfident and not focused enough on the risk you're taking.
Both the inability to initiate a trade, or close a losing trade can create serious psychological issues for a trader going forward. By calling attention to these potential stumbling blocks beforehand, you can properly prepare prior to your first real trade and develop good trading habits from day one.
Start by analyzing yourself. Are you the type of person that can control their emotions and flawlessly execute trades, oftentimes under extremely stressful conditions? Are you the type of person who’s overconfident and prone to take more risk than they should? Before your first real trade you need to look inside yourself and get the answers. We can correct any deficiencies before they result in paralysis (not pulling the trigger) or a huge loss (overconfidence). A huge loss can prematurely end your trading career, or prolong your success until you can raise additional capital.
The difficulty doesn’t end with “pulling the trigger”. In fact what comes next is equally or perhaps more difficult. Once you are in the trade the next hurdle is staying in the trade. When trading foreign exchange you exit the trade as soon as possible after entry when it is not working. Most people who have been successful in non-trading ventures find this concept difficult to implement.
For example, real estate tycoons make their fortune riding out the bad times and selling during the boom periods. The problem with trying to adapt a 'hold on until it comes back' strategy in foreign exchange is that most of the time the currencies are in long-term persistent, directional trends and your equity will be wiped out before the currency comes back.
The other side of the coin is staying in a trade that is working. The most common pitfall is closing out a winning position without a valid reason. Once again, fear is the culprit. Your subconscious demons will be scaring you non-stop with questions like “what if news comes out and you wind up with a loss”. The reality is if news comes out in a currency that is going up, the news has a higher probability of being positive than negative (more on why that is so in a later article).
So your fear is just a baseless annoyance. Don’t try and fight the fear. Accept it. Have a laugh about it and then move on to the task at hand, which is determining an exit strategy based on actual price movement. As Garth says in Waynesworld “Live in the now man”. Worrying about what could be is irrational. Studying your chart and determining an objective exit point is reality based and rational.
Another common pitfall is closing a winning position because you are bored with it; its not moving. In Football, after a star running back breaks free for a 50-yard gain, he comes out of the game temporarily for a breather. When he reenters the game he is a serious threat to gain more yards – this is indisputable. So when your position takes a breather after a winning move, the next likely event is further gains – so why close it?
If you can be courageous under fire and strategically patient, foreign exchange trading may be for you. If you’re a natural gunslinger and reckless you will need to tone your act down a notch or two and we can help you make the necessary adjustments. If putting your money at risk makes you a nervous wreck its because you lack the knowledge base to be confident in your decision making.
Patience to Gain Knowledge through Study and Focus
Many new traders believe all you need to profitably trade foreign currencies are charts, technical indicators and a small bankroll. Most of them blow up (lose all their money) within a few weeks or months; some are initially successful and it takes as long as a year before they blow up. A tiny minority with good money management skills, patience, and a market niche go on to be successful traders. Armed with charts, technical indicators, and a small bankroll, the chance of succeeding is probably 500 to 1.
To increase your chances of success to near certainty requires knowledge; acquiring knowledge takes hard work, study, dedication and focus. Compile your knowledge base without taking any shortcuts, thereby assuring a solid foundation to build upon.
source:
http://www.goforex.net/essential-elements.htm
3/26/09
New reserve currency idea needs work-German minister
NEW YORK, March 27 (Reuters) - Proposals for creating a new global reserve currency to replace the U.S. dollar are gathering momentum but need further examination, Germany's development minister said on Friday.
Heidemarie Wieczorek-Zeul, Germany's minister for economic cooperation and development, is a member of a panel of experts established by U.N. General Assembly President Miguel d'Escoto Brockmann to analyze the global financial crisis and recommend reforms.
One of the recommendations in an 18-page report the panel issued this week is to create a new reserve currency system based on the International Monetary Fund's Special Drawing Rights, or SDRs, to replace the U.S. dollar as the top reserve unit, an idea China supports.
Wieczorek-Zeul said the idea, which the panel's chairman, Nobel Prize-winning economist Joseph Stiglitz, staunchly supports, needed further development.
"This is one of the long-term issues," she told reporters. "But it's clear that even though it's a long-term issue, it has acquired a certain momentum now that countries have spoken positively of it, such as China."
"I'm absolutely certain that we will need further work on this from Stiglitz," Wieczorek-Zeul said. "We'll need to discuss not only the timeframe, but also in what steps it could be could be achievable."
Stiglitz told reporters on Thursday that a global reserve system based on SDRs could be phased in over the next 12 months, though he said it was unlikely to happen that fast. He also said the specifics of a new system still needed to be worked out. For details, see [ID:nN26504037].
Asked about Stiglitz's remarks, a top U.N. official on Friday also spoke in favor of scrapping the single-currency reserve system.
"We really need a system where a national issuer of currency does not have the added responsibility of providing global currency," Jomo Kwame Sundaram, U.N. assistant secretary-general for economic development, told reporters.
Russia earlier this month proposed creating a new reserve currency, to be issued by international financial institutions. This week, China outlined how SDRs could take over the dollar's role as the global reserve unit. [ID:nPEK257817].
On Wednesday, U.S. Treasury Secretary Timothy Geithner said the dollar would remain the top reserve currency but expressed openness to the expanded use of SDRs. [ID:nN26446657]
The reserve currency topic is expected to come up at next Thursday's London summit meeting of the Group of 20 major developed and developing nations on the financial crisis.
The report by the U.N. panel said an SDR-based system "could contribute to global stability, economic strength, and global equity." It also said that such a system would be "feasible, non-inflationary, and could be easily implemented." (Editing by Neil Stempleman)
source:
http://www.reuters.com/article/usDollarRpt/idUSN2754209520090327
Heidemarie Wieczorek-Zeul, Germany's minister for economic cooperation and development, is a member of a panel of experts established by U.N. General Assembly President Miguel d'Escoto Brockmann to analyze the global financial crisis and recommend reforms.
One of the recommendations in an 18-page report the panel issued this week is to create a new reserve currency system based on the International Monetary Fund's Special Drawing Rights, or SDRs, to replace the U.S. dollar as the top reserve unit, an idea China supports.
Wieczorek-Zeul said the idea, which the panel's chairman, Nobel Prize-winning economist Joseph Stiglitz, staunchly supports, needed further development.
"This is one of the long-term issues," she told reporters. "But it's clear that even though it's a long-term issue, it has acquired a certain momentum now that countries have spoken positively of it, such as China."
"I'm absolutely certain that we will need further work on this from Stiglitz," Wieczorek-Zeul said. "We'll need to discuss not only the timeframe, but also in what steps it could be could be achievable."
Stiglitz told reporters on Thursday that a global reserve system based on SDRs could be phased in over the next 12 months, though he said it was unlikely to happen that fast. He also said the specifics of a new system still needed to be worked out. For details, see [ID:nN26504037].
Asked about Stiglitz's remarks, a top U.N. official on Friday also spoke in favor of scrapping the single-currency reserve system.
"We really need a system where a national issuer of currency does not have the added responsibility of providing global currency," Jomo Kwame Sundaram, U.N. assistant secretary-general for economic development, told reporters.
Russia earlier this month proposed creating a new reserve currency, to be issued by international financial institutions. This week, China outlined how SDRs could take over the dollar's role as the global reserve unit. [ID:nPEK257817].
On Wednesday, U.S. Treasury Secretary Timothy Geithner said the dollar would remain the top reserve currency but expressed openness to the expanded use of SDRs. [ID:nN26446657]
The reserve currency topic is expected to come up at next Thursday's London summit meeting of the Group of 20 major developed and developing nations on the financial crisis.
The report by the U.N. panel said an SDR-based system "could contribute to global stability, economic strength, and global equity." It also said that such a system would be "feasible, non-inflationary, and could be easily implemented." (Editing by Neil Stempleman)
source:
http://www.reuters.com/article/usDollarRpt/idUSN2754209520090327
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