Tuesday, 2 June 2009

Replacing the US dollar as global reserve currency - just a pipe dream, right?

One blogger this morning raised the following issue
The world is not organized for nor does it exist for the convenience of America's self indulgent and self obsessed governing elites---- but our Government is so busy talking and posturing that it refuses to listen much less hear.
Perhaps the US administration should be paying closer attention to the possibility of a replacement global currency as it appears to be on the agenda for a forthcoming summit of BRIC nations as outlined here
The leaders of the world's biggest emerging markets may discuss the idea of a supranational currency this month when they meet for a summit in Russia, President Dmitry Medvedev's spokeswoman said on Tuesday.

"I do not exclude that the Russian president's idea about the creation of a supranational currency and the rouble as a (world) reserve currency will be discussed," Medvedev's spokeswoman, Natalya Timakova, told reporters.

Should we be taking this seriously...well I certainly think that it would be smug and ostrich like to ignore it.

It concerns me (perhaps due to my naivete) that even as smart an observer as Simon Johnson, whose opinions are always worthy of close attention, seems to dismiss such a possibility of a dollar replacement as a "pipedream".

For what it's worth my own view is that, in the aftermath of the demise of supposedly rock solid institutions like AIG, Lehman Brothers, Fannie Mae, Freddie Mac, Citigroup, General Motors (no need to go on about it!) we should continue to contemplate the unthinkable.

So to use a quaint old expression perhaps we should put that in our pipe and smoke it.

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