US Person posted previously {Talk About Stress, 2-23-09} that the G-20 was preparing to unveil a plan to replace the US dollar as the world's reserve currency. China's central bank governor Zhou Xiaochuan, in the run up to the meeting, proposed in an essay on the central bank's website that a new monetary unit should be introduced as part of a global system controlled by the International Monetary Fund. Beijing has pubically expressed fears for the declining value of its huge investment in US dollars [see chart] as the Federal Reserve continues to digitally manufacture dollars as part of its rescue of the collapsing US economy and international financial market. Mr. Zhou suggests expanding the role of special drawing rights (SDR) which the IMF introduced after the collapse of the Bretton Woods fixed exchange system. SDRs are valued in a basket of four currencies: US dollar, Yen, Euro, Pound sterling. They are used as a unit of account by IMF and some other international organizations. China proposes to expand the basket of currencies to all major economies and set up a settlement system between SDRs and other currencies so SDRs can be used as an international medium of exchange. The father of modern liberal economics, John Maynard Keynes, made a similar proposal in the 1940's.
Monday, March 23, 2009
A New World Money
US Person posted previously {Talk About Stress, 2-23-09} that the G-20 was preparing to unveil a plan to replace the US dollar as the world's reserve currency. China's central bank governor Zhou Xiaochuan, in the run up to the meeting, proposed in an essay on the central bank's website that a new monetary unit should be introduced as part of a global system controlled by the International Monetary Fund. Beijing has pubically expressed fears for the declining value of its huge investment in US dollars [see chart] as the Federal Reserve continues to digitally manufacture dollars as part of its rescue of the collapsing US economy and international financial market. Mr. Zhou suggests expanding the role of special drawing rights (SDR) which the IMF introduced after the collapse of the Bretton Woods fixed exchange system. SDRs are valued in a basket of four currencies: US dollar, Yen, Euro, Pound sterling. They are used as a unit of account by IMF and some other international organizations. China proposes to expand the basket of currencies to all major economies and set up a settlement system between SDRs and other currencies so SDRs can be used as an international medium of exchange. The father of modern liberal economics, John Maynard Keynes, made a similar proposal in the 1940's.