Tuesday, July 7, 2009

The Debts of the Spenders: The French Challenge Dollar Hegemony at G8

The wolves smell blood. Now, France is joining Russia, India, China, and even Brazil in questioning the legitimacy of a flawed monetary system built on excess leverage and lax oversight.

The call to find an alternative to the U.S dollar as the global reserve currency is gaining momentum as France joined calls by China, India and Russia for a review of the world's currency practices.

French Finance Minister Christine Lagarde challenged the dollar's supremacy “in a world that has changed because of the crisis and the growing role of emerging countries.”

The questioning of the U.S. dollar as the key currency for central banks by a leader of a major European economy gives renewed life to the issue at this week's Group of Eight summit meeting in L'Aquila, Italy. The U.S. dollar has long served as the dominant medium of exchange, and tends to dominate the official money reserves that countries hold through their governments and at their central banks.

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