China's top banker proposes new world reserve currency!
BEIJING, China - March 23, 2009 - In an essay published Monday, the head of China's central bank proposed a plan to displace the Amerikan dollar as the world's standard and replace it with a global reserve currency operated from the International Monetary Fund.
"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," reported the Times Online.
"But that's unlikely to happen, says Robert Scott, senior international economist with the Economic Policy Institute," reported Forbes. "'It's partly posturing, it's partly buyer's remorse,' he said, noting China, at some point, is going to have to let its yuan currency rise in value relative to the dollar's current price - likely by upwards of 30.0%. That means China's investments in U.S. dollars, via Treasuries, would lose a third of their value in yuan terms.
“They're getting hammered,” said Scott. “Chinese leaders' heavy investments in the U.S. economy have exposed them to domestic criticism."