The report, The Future Global Reserve System - An Asian Perspective, says that while the US dollar will remain the leading currency of international exchange for now, a rebalancing in the global economy means that in the future, a wider range of currencies will need to be used to settle trade and investment.

'Our current global reserve system, unfortunately, is not functioning too well,' ADB President Haruhiko Kuroda said in a message in the report. 'That means, more than ever, we need to work together both globally and regionally to find solutions—however gradually implemented—that will bring about a workable reform of the global reserve system.'

There is no single alternative to the US dollar as the world's reserve currency. The Greek debt crisis has exposed the euro's lack of a solid sovereign backbone. The yen is Asia's most internationally accepted currency but its reserve status has declined recently. The yuan, the currency of the fast expanding economy of the People's Republic of China, may well become a reserve currency sooner than most anticipate but for now, cannot fill the role.

The report is the result of an ADB-financed study by 17 internationally renowned monetary experts led by Jeffrey Sachs, Director of the Earth Institute and ADB Chief Economist Jong-Wha Lee. It describes the strengths and weaknesses of the current system, the case for cooperation in bringing about reform, and the increasing role Asia must play in making this happen.

Reforming the global reserve system has huge implications for Asia. The region holds close to half of the world's total foreign exchange reserves and is highly dependent on international trade and capital flows for its growing prosperity.

'The dollar-based reserve system has been fraying for years,' said Joseph Stiglitz, a Nobel laureate and a contributor to the report. 'A new global reserve system is absolutely essential if we are to restore the global economy to sustained prosperity and stability. But achieving this is not easy.'

The report recommends that with Asia's growing economic clout, the region should increase economic integration and policy coordination to smooth the transition to a multi-currency reserve system.

Exchange rate and monetary policy coordination needs to be stepped up and there need to be formal mechanisms for economic consultation and surveillance between regional and global institutions. Regional foreign exchange reserves must be more actively deployed through swap lines, special drawing rights and other types of borrowing so there is no repeat of the recent credit crunch.

The report also suggested that given the failure to develop globally binding agreements on climate change, a portion of the revenue that a country receives through seignorage could be used to help their region tackle climate change. Seignorage refers to the profits resulting from the difference in cost of printing money and the face value of the money.

On a global level, the report recommends a stronger set of capital market rules be devised given the failure of the financial system to police itself, and regularly gathering international monetary experts to discuss current account imbalances and thus avoid unnecessary friction between countries on issues such as trade or varying exchange rate regimes.