Monday, March 23, 2009

The Debts of the Lenders: China Plans For Eventual Dollar De-Linkage

While the US continues to desperately re-inflate the bubble ( such as through its latest attempts to pump more leverage into the system w/the TALF program ), China is making plans for lower dollar dependence.

Sorry goldbugs - the new proposed system is not backed by gold.


BEIJING, March 23 (Reuters) - China's central bank chief on Monday proposed a sweeping overhaul of the global monetary system, outlining how the dollar could eventually be replaced as the world's main reserve currency by the Special Drawing Right.

The 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, Zhou Xiaochuan, governor of the People's Bank of China, said in remarks published on Monday on the bank's website,

"The desirable goal of reforming the international monetary system, therefore, is to create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies," he added.


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