DEFINITION of 'Super Currency'

A supranational currency printed by the International Monetary Fund (IMF) that would be tied to a basket of reserve currencies. The concept of a global "super currency" has been periodically discussed between world leaders as well as endorsed by 2001 Nobel Memorial Prize-winner Joseph Stiglitz and well-known business leader George Soros for years. A super currency could also be tied to a single currency, but the interconnectedness of world financial markets and concerns about the volatility that can occur as a result of the system being tied to one currency have made this idea much less popular.

BREAKING DOWN 'Super Currency'

Super-currency proponents have called for the IMF to use its special drawing rights (SDRs) - an internal international accounting system for IMF countries - to create a global super currency. The SDR was created in 1969 as a result of the Bretton Woods fixed exchange rate and is a global reserve asset based on a basket of existing currencies.

One of the most critical concerns surrounding the creation of a super currency is that the introduction of new legal tender worldwide could be a catalyst for inflation. It could also potentially weaken individual countries' currencies and usurp or complicate the functioning of existing governing financial institutions.

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