China proposes replacing the US dollar

[Black Swan]

March 23, 2009

China proposes replacing the US dollar
Jane Macartney in Beijing
March 23, 2009

China’s central bank governor has issued a bold proposal to overhaul the global monetary system and one day replace the dollar as the world’s main reserve currency with the International Monetary Fund's (IMF) Special Drawing Right

Zhou Xiaochuan, governor of the People’s Bank of China, argued that what he called a super-sovereign reserve currency would not only eliminate the risks inherent in currencies such as the dollar, which are backed only by the credit of the issuing country and not by gold or silver, but would also make it possible to manage global liquidity.

The Special Drawing Right (SDR) is an international reserve asset created by the International Monetary Fund in 1969 that has the potential to act as a super-sovereign reserve currency, he said.

Careful not to refer explicitly to the dollar, Mr Zhou said: “The role of the SDR has not been put into full play due to limitations on its allocation and the scope of its uses. However, it serves as the light in the tunnel for the reform of the international monetary system."

It was unlikely to be a coincidence that his speech was published just before leaders of the world’s developed and emerging economies gather in London on April 2 for a Group of 20 summit.

However, reform of the international monetary system is likely to take a back seat to the more urgent task of economic and financial stabilisation.

However, his remarks spell out Beijing's dissatisfaction with the primacy of the US currency, which Zhou said has led to increasingly frequent global financial crises since the collapse in 1971 of the Bretton Woods system of fixed but adjustable exchange rates.

http://business.timesonline.co.uk/tol/business/economics/article5961065.ece

[NHSparky]

Aren't these the people who won't let their currency float, instead having tied it to the dollar?

Memo to China--yes, we have a billion fewer people than you do.  But let me explain something--you need us more than we need you.  We can get cheap plastic shit ANYWHERE.  But if we decide to shut your asses off, you're screwed, but GOOD.

Glad to have cleared things up for ya'll.

[Black Swan]

Aren't these the people who won't let their currency float, instead having tied it to the dollar?

Memo to China--yes, we have a billion fewer people than you do.  But let me explain something--you need us more than we need you.  We can get cheap plastic shit ANYWHERE.  But if we decide to shut your asses off, you're screwed, but GOOD.

Glad to have cleared things up for ya'll.

Don't they own a considerable amount of our debt?

[NHSparky]

Don't they own a considerable amount of our debt?

And how did they get that?  By selling us cheap crap and protectionist tarriffs which don't open up THEIR markets to our goods...that and blatant trademark infringement.  Face it--if we eliminated the trade deficit with China and simply paid the debt we owe them off, they'd be SCREWED.