New global currency talks are renewed. But, is it required?
There are $6.5 trilion in currency reserves all over the world and most of them are in dollars. That is putting all your eggs in one basket. Given the global gloom and its origins, the world, especially China and Russia is looking for a new world order – a new currency. And they think America is the main reason behind the mess the world is in.
Euro was tipped to be the new world currency but it has its own problems. Adding to the existing Euro’s problems is the statement by Russian president Dmitry Medvedev :
“The dollar system or the system based on the dollar and euro have shown that they are flawed," (Business Week)
That’s not an insinuation anymore. That is a direct remark on the existing global currency – the dollar and a damper for the probable new global currency of euro.
China has 70% of its $2 trillion forex reserves in dollar. Most of India’s $260 billion forex reserves are in dollars. There are renewed discussions in the Indian camp about re-thinking the forex portfolio.
China has been pretty vehement in its talk about the global currency. Looks like France and Brazil have joined the party along with Russia. When Russia and China support the same cause then we know we have a serious issue at hand. They wanted to discuss this issue at the G8 summit.
Only problem is, the world has a bigger fish to fry (shouldn’t it be freeze?) at G8. Global warming and not global currency is a more burning and pertinent problem to discuss at G8. And I agree.
Though everyone is talking about a new currency, no one has clear idea of what the global currency would.
I am sure of one currency that would not be a global currency. That is the Zimbabwean dollar. Everything else is on the table – excluding the dollar of course.
What’s wrong with the dollar anyway?