The attack on the dollar

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The attack on the dollar

BY THOMAS MANN FISCHER, MARK AND FRANK SIEREN SCHIERITZ | © DIE ZEIT, 02.04.2009 No 15

The largest imbalance in the global economy stands at the summit this week of the G-20-Heads of State and Government in London on any agenda. That seems a little odd, because it's about money. It is a question whether the international community in the future can trust the dollar to settle business transactions and reserves to form, although the United States for decades beyond their means and now have lived for rescuing the economy of their Grade anwerfen press as never before. As I said, this is for the G20 in London are nowhere discussed.

The Chinese have not let that stop, but to talk. And although their relationship very loud. On Monday a week ago, around 17:35 clock time, while all over the world fever preparations for the G-20-summit started, the central bank of the country an essay of her boss Zhou Xiaochuan on the net - in the English translation. Title of the paper: "The reform of the international monetary system." The Chinese central bank chief called for short, the replacement of the U.S. Dollar as an anchor. In the capitals of the West, it was somewhat surprising. What the Chinese wanted to achieve?

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UNITED NATIONS, March 26 (Reuters) - A reserve currency system based on an IMF unit instead of the U.S. dollar, a proposal floated by China, could be phased in within a year, Nobel Prize-winning economist Joseph Stiglitz said on Thursday.

Stiglitz, a Columbia University economics professor who heads a U.N. expert panel analyzing the financial crisis and recommending reforms, addressed an issue that became a hot topic this week.

Asked at a news conference when the International Monetary Fund's Special Drawing Rights (SDR) could replace the dollar as the top reserve unit, Stiglitz replied, "It could begin to be phased in next year.
He said the system could be phased in within 12 months. "Realistically, I don't think it'll happen that fast," Stiglitz said.

One of the main issues left to be worked out is how the SDRs would be allocated, he said.

The reserve currency topic is expected to come up at next Thursday's London summit meeting of the Group of 20 big developed and developing nations on the financial crisis.

Stiglitz's panel has issued a set of recommendations for global financial reforms, including a proposal for a new SDR-based reserve system.

http://www.reuters.com/article/marketsNews/idUSN2650403720090326?sp=true

Quote:

..... the biggest changes in the IMF will come after 2011, when it has been agreed that there will be a review of the voting structure. That could lead to the US losing its veto power, while China and other emerging countries get a bigger voice.

It has already been agreed that in future, the convention that the World Bank and IMF must be headed by an American and a European respectively will be abandoned.

In return, China will be asked to lend some of its reserves to the IMF - and will continue to push for the idea that the SDR will become a real reserve currency, ultimately replacing the dollar......

http://news.bbc.co.uk/2/hi/business/7979484.stm

Quote:

The Special Drawing Right (SDR) was created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. A country participating in this system needed official reserves"government or central bank holdings of gold and widely accepted foreign currencies

http://www.imf.org/external/np/exr/facts/sdr.htm

SDR SDR SDR SDR SDR

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