Russia, Germany & China co-operating to replace Dollar as reserve currency

[cyberianpan]

China has made noises on this before & the idea is gathering momentum:

MOSCOW (AFP) — Russia and China are coordinating proposals on a new global currency that could replace the US dollar as a reserve currency to prevent a repeat of the global economic crisis, the Kremlin said on Monday.
"We have received proposals from our colleagues in China, detailed proposals," President Dmitry Medvedev's top economic adviser Arkady Dvorkovich said. "Our positions are very similar.


NEW YORK, March 27 (Reuters) - Proposals for creating a new global reserve currency to replace the U.S. dollar are gathering momentum but need further examination, Germany's development minister said on Friday.


LA Times
Meantime, China has been questioning the dominance of the U.S. dollar and suggesting the creation of a new currency reserve to replace it as the world standard.

Despite these differences, many expect G-20 leaders to make cooperation the watchword at the summit.

Unwinding existing dollar positions strikes me as challenging to say the least... are any of these ideas runners ?

cYp

[Bobert]

Obie is attending a US-EU summit in Prague on the 5th of April so I'd expect it to come up.

[cyberianpan]

Paul Krugman addresses this today:

China’s Dollar Trap

But China still seems to have unrealistic expectations. And that’s a problem for all of us.
The big news last week was a speech by Zhou Xiaochuan, the governor of China’s central bank, calling for a new “super-sovereign reserve currency.”
And just the other day, it seems, China’s leaders woke up and realized that they had a problem.
And there’s nothing to keep China from diversifying its reserves away from the dollar, indeed from holding a reserve basket matching the composition of the S.D.R.’s — nothing, that is, except for the fact that China now owns so many dollars that it can’t sell them off without drivingthe dollar down and triggering the very capital loss its leaders fear.

Indeed, China is in a pickle here ... they've shedloads of dollars ... Obama & the Fed are just printing more ... at this stage about all China can do is threaten to nuke the USA to get their due.

cYp

[atlantic]

They can start, which they are doing buying hard assets.
They also are putting together agreements with other countries to trade in yuan
China, Argentina sign 70b yuan currency swap deal

[mmrebel]

Paul Krugman addresses this today:

China’s Dollar Trap


Indeed, China is in a pickle here ... they've shedloads of dollars ... Obama & the Fed are just printing more ... at this stage about all China can do is threaten to nuke the USA to get their due.

cYp

China can scream and roar all they want but are they not getting their due for the huge trade unbalance they have built up with the USA over the years?

[ivnryn]

SDR would be one way to shift to a world currency without it technically being a monopoly.

1 SDR is a basket containing:

$0.6320 (EUR 0.468581)
EUR 0.4100 (EUR 0.4100)
18.4 Yen (EUR 0.136013)
GBP 0.0903 (EUR 0.0992960)

Total value of the basket in Euros: EUR 1.11389

People could be paid in SDR, a EUR 40k salary would convert to

SDR 35,910

which gives a basket

$22,695
EUR 14,723
YEN 661k
GBP 3,243

This would shield people from the effects of currency variation. Ofc, it could make mortgages harder to pay unless they were also denominated in SDRs.

Finally, it would create a big incentive for inflation. Inflating a currency would gain the government money, but the inflation would be spread over all countries that use SDRs.

[Clanrickard]

Let us not forget that China is a one party state ruled by a bunch of ultra nationalistic thugs. It would do no harm and much good if they felt a bit of pain and social unrest. Hopefully it will lead to a second and ultimately successful Tienanmen Square mark II. The Germans have frankly disgraced themselves with their slavish cosying up to Russia. Both Russia and China do not have the good of the world economy at heart merely the good of the reprobates that rule those two sordid countries.

[seabhcan]

SDR would be one way to shift to a world currency without it technically being a monopoly.

1 SDR is a basket containing:

$0.6320 (EUR 0.468581)
EUR 0.4100 (EUR 0.4100)
18.4 Yen (EUR 0.136013)
GBP 0.0903 (EUR 0.0992960)

Total value of the basket in Euros: EUR 1.11389

People could be paid in SDR, a EUR 40k salary would convert to

SDR 35,910

which gives a basket

$22,695
EUR 14,723
YEN 661k
GBP 3,243

This would shield people from the effects of currency variation. Ofc, it could make mortgages harder to pay unless they were also denominated in SDRs.

Finally, it would create a big incentive for inflation. Inflating a currency would gain the government money, but the inflation would be spread over all countries that use SDRs.

I don't think anyone is talking about a 'single' world currency, rather a common world currency. Remember the 'ECU' existed for decades as a currency for intra country trade before the euro made it physical.

[feargach]

Let us not forget that China is a one party state ruled by a bunch of ultra nationalistic thugs. It would do no harm and much good if they felt a bit of pain and social unrest. .

You wouldn't say that if it was you on the wrong end of the blowtorch and pliers in the "re-education" camp. Unfortunately it will be those poor bastards and their kids who will be feeling the pain, not the thugs.

Yerrah what harm, let's buy more Chinese toys for the kids this year!

[atlantic]

Chinese Government have given their people more freedom in the last 15 years,one of the hardest things for the government would be to take this back.I think if they tried there would be a blood bath and the people would win .

Let us not forget that China is a one party state ruled by a bunch of ultra nationalistic thugs. It would do no harm and much good if they felt a bit of pain and social unrest. Hopefully it will lead to a second and ultimately successful Tienanmen Square mark II. The Germans have frankly disgraced themselves with their slavish cosying up to Russia. Both Russia and China do not have the good of the world economy at heart merely the good of the reprobates that rule those two sordid countries.