Comments on: What Is the World Reserve Currency?

By: jennismortal

jennismortal — Tue, 04 Aug 2009 11:44:17 +0000

The United States dollar is the most widely held reserve currency in the world today. Throughout the last decade, an average of two thirds of the total allocated foreign exchange reserves of countries have been in U.S. dollars. For this reason, the U.S. dollar is said to have “reserve-currency status,” making it somewhat easier for the United States to run higher trade deficits with greatly postponed economic impact.Central bank reserves held in dollar-denominated debt, however, are small compared to private holdings of such debt. In the event that non-United States holders of dollar-denominated assets decided to shift holdings to assets denominated in other currencies, there could be serious consequences for the U.S. economy. Changes of this kind are rare, and typically change takes place gradually over time; the markets involved adjust accordingly.

By: kenyantykoon

kenyantykoon — Thu, 30 Jul 2009 14:42:43 +0000

i still think that for the dollar, it is the end of an era. the banking industry messed up and otherwise good strong currency. the euro is the next big thing

By: MoneyEnergy

MoneyEnergy — Sat, 25 Jul 2009 15:06:10 +0000

No worries. I guess you’re probably talking more about the strength of their economy in general vis a vis the U.S. They certainly are making some pretty bold capitalist moves for a so-called “communist” country (a label I think isn’t valid anymore, at least at the economic level).

By: Len Penzo

Len Penzo — Fri, 24 Jul 2009 18:58:34 +0000

I understand. I kind of veered off and addressed an alternate proposition of my own that has been bandied about. My apologies. :-)

Len
Len Penzo dot Com

By: MoneyEnergy

MoneyEnergy — Fri, 24 Jul 2009 14:10:23 +0000

Thanks for the comments, everyone. Was recently in England and read quite a bit in their media about China’s financial strategies going ahead. They are definitely making the move away from the US dollar in their reserves. Moving towards buying up companies in resource-rich countries like Canada and Australia.

@Thicken – yes, it’s interesting that the gold standard hasn’t been proposed in this context, isn’t it? That would severely limit what we call economic “growth” today.

@Len – the proposal isn’t about the renminbi… :)

By: Thicken My Wallet

Thicken My Wallet — Tue, 21 Jul 2009 15:36:34 +0000

I noticed nary a country has proposed adopting the gold standard again- shows you how addicted we all are to leverage.

By: Len Penzo

Len Penzo — Wed, 15 Jul 2009 02:00:04 +0000

Before the renminbi can supplant the US as the world’s reserve currency, there are going to have to be some significant policy changes over in COMMUNIST China:

1. The financial reforms currently underway have to be continued
2. Restrictions will have to be eased on money entering and leaving COMMUNIST China
3. The COMMUNISTS will have to relinquish their dictatorial stranglehold on the country

Until all three of those changes occur, the renminbi will not supplant the US dollar. If and when they do occur, however, I suspect the change over from the US dollar to the renminbi as the world’s reserve currency will be rapid.

By the way, am I the only one who can’t say renminbi three times in quick succession without needing a chopstick to untie the knot in my tongue? lol

My $0.02 (after taxes)

Len
Len Penzo dot Com

By: WM

WM — Tue, 14 Jul 2009 16:07:25 +0000

I find this whole currency thing facinating and I love how your breaking it down into bite sized peices in different posts. Your making it much easier to understand!

By: Miranda

Miranda — Tue, 14 Jul 2009 16:05:54 +0000

I think China is positioning itself. It’s been arranging currency swaps with other developing nations, and diversifying investments. China takes the long view, though. Any change is likely to come slowly, and not really take effect for at least two decades.