A global reserve currency
should have high liquidity, be a store of value, and should be able to see high fresh issuance of debt.
is going to be the world's primary reserve currency
It was only a question of time before the desirability of the dollar as the dominant global reserve currency
would be questioned," observes David Woo, head of foreign exchange strategy at Barclays Capital in London.
My view and that is the view I have heard expressed here is that the dollar was likely to remain the principle reserve currency
," the U.
As such, China finds itself concerned about the dollar since it is the world's primary reserve currency
, not only in what pertains to the value of the treasury bonds that China holds, but also because of China's enormous reserves in U.
China was most specific, calling in March for the dollar to be replaced as dominant reserve currency
by the IMF Special Drawing Right, SDR.
But sceptics question whether the SDR could ever replace the dollar as the world's leading reserve currency
, for the simple reason that the SDR is not a currency.
Yet, this matter is not optional, as decision-makers in Washington may presume - the first international reserve currency
is determined by subjective circumstances that reflect the economic significance of the country in question and the volume of its commercial exchange across the world.
IMF Managing Director Dominique Strauss-Kahn said Wednesday that talks on a new world reserve currency
to replace the US dollar were "legitimate" and could take place "in the coming months," reported AFP.
Zhou Xiaochuan, Governor of the Bank of China, wants a new international reserve currency
, one that is "disconnected from economic conditions and sovereign interests of any single country.
The dollar replaced the British pound as the world's reserve currency
in the period following World War II, meaning that most countries were willing to accept payment in dollars, knowing that they were universally accepted as a secure store of value.
The euro is making a serious bid to displace the dollar as the global reserve currency
chiefly because of the fact that Washington, despite its claim to be the capital of a free-market society, is more profligate in its spending and indebtedness than the overtly socialist governments of Europe.