Thursday, March 19, 2009

The Debts of the Lenders: US To Lose Reserve Currency Status?

Goldbugs rejoice! Your day is coming soon. I apologize for insulting you before.

MOSCOW, March 19 (Reuters) - China and other emerging nations back Russia's call for a discussion on how to replace the dollar as the world's primary reserve currency, a senior Russian government source said on Thursday. Russia has proposed the creation of a new reserve currency, to be issued by international financial institutions, among other measures in the text of its proposals to the April G20 summit published last Monday.

Calls for a rethink of the dollar's status as world's sole benchmark currency come amid concerns about its long-term value as the U.S. Federal Reserve moved to pump more than a trillion dollars of new cash into the ailing economy late Wednesday.

To be sure, the USD will continue to remain the world's dominant reserve currency for many years to come. But nothing lasts forever. Steps are already being taken to diversify away from the status quo towards a basket of currencies. Whether that will lead to the much hyped "Amero" or derivatively named currency thereof is another question entirely.


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