Cassandra is not alone: US backing for world currency stuns markets

It’s been in the air for a long time: the IMF is meant to “unite” the world with Special Drawing Rights (SDRs) as the debt-based global currency. Let’s hope that the gods will NOT allow this complete enslavements! But Cassandra was always right, wasn’t she…

Here’s an article in The Telegraph that summarises the current power plays at work.

And here are related articles that I select for once while too many people write too much about the subject methinks, while not enough people challenge those who pull the strings…

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The Chinese proposal, outlined this week by central bank governor Zhou Xiaochuan, calls for a “super-sovereign reserve currency” under IMF management, turning the Fund into a sort of world central bank.

The idea is that the IMF should activate its dormant powers to issue Special Drawing Rights. These SDRs would expand their role over time, becoming a “widely-accepted means of payments”.

Mr Bloom said that any switch towards use of SDRs has direct implications for the currency markets. At the moment, 65pc of the world’s $6.8 trillion stash of foreign reserves is held in dollars. But the dollar makes up just 42pc of the basket weighting of SDRs. So any SDR purchase under current rules must favour the euro, yen and sterling.

Beijing has the backing of Russia and a clutch of emerging powers in Asia and Latin America. Economists have toyed with such schemes before but the issue has vaulted to the top of the political agenda as creditor states around the world takes fright at the extreme measures now being adopted by the Federal Reserve, especially the decision to buy US government debt directly with printed money.

Mr Bloom said the US is discovering that the sensitivities of creditors cannot be ignored. “China holds almost 30pc of the world’s entire reserves. What they say matters,” he said.

Mr Geithner’s friendly comments about the SDR plan seem intended to soothe Chinese feelings after a spat in January over alleged currency manipulation by Beijing, but he will now have to explain his own categorical assurance to Congress on Tuesday that he would not countenance any moves towards a world currency.

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2 responses to “Cassandra is not alone: US backing for world currency stuns markets

  1. The currency is not stable, but thank to this we can earn money on forex.

  2. True, NO currency is stable. BUT it would be much IF currencies were stable.

    To make money out of money is ‘riba’ in Islam, th worst deadly sin. In Christianity is ‘usury’ and also forbidden. So it’s an ethical issue ultimately.

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