Monday, March 23, 2009
There have been rumors and announcements from China about a new reserve currency.
And the IMF has said that it is considering printing hundreds of billions of dollars worth of its own currency.
Today, the two stories came together in a dramatic development. Specifically, the head of China's central bank proposed making the IMF's currency the world's reserve currency, to replace the dollar.
Is this the start of a huge change, or just more posturing ahead of the G-20 summit next month?
Given that a U.N. panel will recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, the attack on the dollar from Geithner and Bernanke's various actions, and the fact that IMF is independently talking about printing large quantities of its own currency, the possibility that this is real cannot be totally dismissed.