China Asks For IMF-led Global Currency – Zhou Xiaochuan Calls For Currency Reserve Alternative

Here it is, folks.  China’s Central Bank officially asking to bump the greenback from the world currency reserve. Yes.  It’s for real.  So far the EU has rejected the call.  But the communique was written, in an unprecedented move, in both Chinese and English so the world community could understand it (or at least, more of the world’s community).  It was sent out late Monday evening by Chinese central bank governor Zhou Xiaochuan.

“Beijing has long been uneasy about relying on the U.S. dollar for the bulk of its trade and to store foreign reserves. Premier Wen Jiabao publicly appealed to Washington this month to avoid any steps in response to the crisis that might erode the value of the dollar and Beijing’s estimated $1-trillion holdings in Treasuries and other U.S. government debt.” an article from the Globe and Mail reports.

And they’ve already got a full proposal for it.

“The currency should be based on shares in the IMF held by its 185 member countries, known as special drawing rights, or SDRs, the essay said. The Washington-based IMF advises governments on economic policy and lends money to help with balance-of-payments problems.”

“A super-sovereign reserve currency managed by a global institution could be used to both create and control global liquidity,” Mr. Zhou wrote. “This will significantly reduce the risks of a future crisis and enhance crisis management capability.”

Apparently Russia is on side with China and pressing for similar reforms.

This is all going to come to a head at the big G20 meeting in London, England, on April 02.  Isn’t this really starting to look like the end of the world as we knew it?  I’m still in shock.  I think these are sensitive times.  We need to be careful and not take presumptive actions.  Does China have to be so dramatic?  Why can’t they work gradually and just let their yuan appreciate?

If you look closely at their proposal, in effect it amounts to one really big super-central-bank.  How is that going to solve anything?  We already know about the systemic failure of institutions like the UN and IMF.

This marks the second time this month that China has explicitly hinted at its fears concerning the integrity of the US dollar.

I would tune into Peter Schiff’s radio show tomorrow night (Wednesday night) in order to ask him his opinion on this and whether it will be taken seriously.  I wouldn’t be surprised if he supports the idea, actually.  And when you think about it it makes sense that it’s China doing the asking, since they’re the ones left holding the HOT POTATO.  Full article is available here.

• China Pushes More Diversification In Foreign Exchange Reserves As Part of "Going Out" Strategy
• The New Gold Standard: Will Gold Be Part of A Basket of Currencies Replacing the Dollar as World Reserve?
• Three Dead Canaries and More Market Mayhem
• U.S. Dollar Must Be Replaced As The World's Reserve Currency: UN (Breaking News)
• Biggest Foreign Buyers of U.S. Debt

• How To Invest Like China
• Indan Rupee Likely To Get Stronger
• Money, Gold, the FED, and why you should be concerned about the US Dollar
• World Coins
• How High Oil Prices can be the Downfall of Asian Economies, and the Savior for the West

Tagged as: China, IMF, international economy, news, US dollar, world reserve currency