A New Global Currency

For many weeks now in my navigation through the articles and commentaries concerning economics and international politics I have come across a trend.  A consistent call for a new currency to be adopted for the use of global trade and exchange.  It has been a call mainly from China and Russia and India as they themselves try to manage the effects of the financial crisis on their own respective economies.

The dollar is going to decline as I have mentioned in the past.  From China’s point of view this is rarely surprising as they hold more than $1.95 trillion of US currency and as the US continues to print more money under the guise of quantitative easing  this is going to continue to devalue the paper and debt holdings of China as well as for Japan.  Please view the video below.

“To avoid the inherent deficiencies of using sovereign currencies for reserves, there’s a need to create an international reserve currency that’s delinked from sovereign nations,” the People’s Bank of China.  Proposal between Brazil and China have been initiated to move away from the dollar and use yuan and reais to settle trade instead.  There are also indications that China is purchasing more gold and commodities to push it currency to international status or reserve currency.  I personally don’t see this happening but what I do see as more plausible is some sort of currency established by the IMF like the Special Drawing Rights (SDR) which is not vulnerable to the fluctuations and economic policy of any single nation.

It is only a matter of time till the changes come in.  Watch the news and study the developments.  One could see the preeminence of a currency that is not reliant on one economy and a currency that is not sovereign that will become dominant and assume its role internationally.