LONDON (Reuters) - If the euro’s potential as a perfect “anti-dollar” in world currency reserves has been stunted by an existential euro zone debt crisis, more radical rethinking of the global monetary system may now gain momentum.

Russia's President Dimitry Medvedev (L), Brazil's President Luiz Inacio Lula da SIlva and China's President Hu Jintao (R) attend a photocall at Itamaraty Palace in Brasilia April 15, 2010. REUTERS/Paulo Whitaker

Governments around the world have for decades bristled at U.S. “seigniorage” from providing the world’s de facto reserve currency -- what France’s Valery Giscard d’Estaing in the 1960s called America’s “exorbitant privilege.”

China, Russia, Brazil and the International Monetary Fund now all want a greater use and sponsorship of Special Drawing Rights -- a basket of dollars, euros, yen and sterling that acts as a claim on the IMF and its 186 member countries and a supra-national reserve asset.

In essence, reserve status -- however well earned -- allows the U.S. to simply print more dollars to buy dollar-priced global goods such as oil and commodities. And any resulting drop in its exchange rate earns U.S. entities a tidy margin on overseas assets while foreigners’ dollar reserves are devalued.

Fear of this potential conflict of interest between the domestic and international policy obligations of the reserve currency country, the so-called Triffin Dilemma, has intensified in recent years as global hard-cash reserves soared past $8 trillion (5.44 trillion pounds) and U.S. deficits ballooned.

The euro, which cut the dollar share of world reserves by almost 10 percentage points to 62 percent since launch in 1999, held out some chance of dividing the risks. But if the euro, which now accounts for more than a quarter of world reserves, has been hit by at least a temporary roadblock, then what next?

Few policymakers, including many in the United States, want to rebuild a uni-polar system that has fostered a timebomb of global imbalances between America and the developing world -- imbalances at least partly for to blame for three years of devastating financial crises.

What is more, the dollar-centric system has periodically led to acute dollar shortages in global banks still heavily dependent on dollar funding. Even U.S. Federal Reserve chief Ben Bernanke last month said foreign banks may need to be weaned off their over-dependency and said the Fed should not necessarily provide a “permanent service” of pumping dollars overseas.

China -- which alone holds more than a quarter of world reserves -- and other developing countries remain anxious of the scale of their collective $4 trillion exposure to U.S. fiscal and monetary probity.

But with euro angst a new backdrop, more finance chiefs from the world’s top 20 economies -- meeting in South Korea this week -- may think beyond even the dual-currency setup.

SUPRA-NATIONAL RESERVE ASSET

Just over a year ago, China’s central bank chief Zhou Xiaochuan put the case for developing the SDR -- currently only 4 percent of world stockpiles -- as a reserve asset and advocated inclusion of its yuan in the basket, a five-yearly review of which is due later in 2010.

A month after Zhou’s paper, and after a gap of 30 years, the unit was revived as a tool to ease the financial raging crisis and the IMF transferred an allocation of $250 billion in SDRs to all members based on their quotas at the Fund.

Paulo Nogueira Batista, who represents Brazil and eight other countries at the IMF board, told Reuters last week this could be used again in a fresh bout of stress.

One advantage of the SDR is that, as an IOU, it need not be realized unless the reserves themselves have to be spent. Given much of the buildup of reserves has been far in excess of what would be required in any emergency, use of the SDR as an asset could have a less distorting impact on capital flows than requiring the creation of more and more dollar and euro assets.

Its big disadvantage, at least for the 43 reserve managers polled by Central Banking Publications late last year, is that issuance requires political agreement and liquidity is questionable due to a lack of use in the private sector.

Independent analysts reckon the dollar’s primary status should not nor could not vanish over a few years. But many see gradual development of the SDR alongside the existing world currencies as desirable over the decade ahead.

One proposal this week from the World Economic Forum’s year-long Global Redesign programme was to make SDR allocations on a regular basis in amounts to satisfy on-going demand for official reserves. It suggested $200 billion per year.

A report led by think tank Chatham House in March detailed measures to expand SDR usage, including an independent IMF body to decide on new issuance; creation of an IMF substitution account where countries can swap constituent currencies for SDRs; and encouragement of private use by allowing SDR securities and settlement systems to be created.

Big banks too see the argument strengthening. “Providing more SDR assets would spread out the gains from seigniorage more broadly and also reduce the structural risks associated with requiring the U.S. to pump out more dollar assets for the still-growing stock of overall reserves,” Goldman Sachs said last week.