Global Currency - Reserve Currency
Global Currency - Reserve Currency: The Dollar Will Likely Remain the World’s Reserve Currency - BUT Countries Will Still Dump the Buck Regardless! While global financial regulation will certainly be a topic addressed during the summit, I can tell you a topic, which won’t get any traction: a move toward a global currency to replace the dollar.
For all of the press China and Russia have garnered with their proposals the past few days, the U.S. will block any serious attempts to discuss an alternative to the U.S. dollar.
We’ve already seen a lot of the damage to the dollar’s credibility as the world’s reserve currency. And regardless of whether an official alternative to the U.S. dollar is found, foreign countries will continue to diversify their reserves out of the dollar.
Data from the IMF released yesterday showed the dollar’s share of official foreign exchange reserves fell last year, while the yen and euro gained. The dollar accounted for 64% of the reserves, down slightly from the month prior.
As with financial regulation, each country has its own agenda with regard to its reserves, and the trend away from U.S. dollar will likely continue, no matter what is or is not decided over the next few days in London.
Basically, each leader to the G-20 summit is showing up with their own set of problems, and the U.S. and U.K.’s problems are some of the worst. It’s ludicrous to think these leaders will solve all of these diverse problems in just eight days.
While the meeting will hopefully start us on the path toward global financial reforms, I expect the global markets to be disappointed with the lack G-20 progress.
Source: FX University Daily
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