World could dump US dollar and opt for shared currency

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The days of the US dollar as the global reserve currency seem to be numbered. For some time now, independent commentators have been saying that the US dollar is on shaky ground – or could even collapse altogether.

But when a UN panel recommends that the world should ditch the dollar in favour of a basket of shared currencies and the mainstream business press like Reuters takes it seriously, you got to sit up and take notice:

U.N. panel says world should ditch dollar
Wed Mar 18, 2009

By Jeremy Gaunt, European Investment Correspondent

LUXEMBOURG (Reuters) – A U.N. panel will next week recommend that the world ditch the dollar as its reserve currency in favor of a shared basket of currencies, a member of the panel said on Wednesday, adding to pressure on the dollar.

Currency specialist Avinash Persaud, a member of the panel of experts, told a Reuters Funds Summit in Luxembourg that the proposal was to create something like the old Ecu, or European currency unit, that was a hard-traded, weighted basket. Read full article here.

Meanwhile, the speed at which global manufacturing is falling is reminiscent of the bust leading up to the Great Depression. Check out this NYT article here.

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thor

here’s smothing to chew on. it’s a bit long, but you can speedread and skip… The Decline of the American Empire Who’s Calling the Shots Now? By DAVE LINDORFF It may not be obvious today, and certainly it’s not how the corporate media reported it, but future historians are likely to look back at March 13, 2009 as the day that American imperialism began it’s inexorable decline. That’s the day that Chinese Premier Wen Jiabao announced that his country was “worried” about its holdings of over $1 trillion in US treasury securities, and warned that he wanted the US to… Read more »

ocho-onda

The U.S. wants to have their cake and eat it as well. It is … amazing that the rest of the world was not only duped but continues to be duped that the world has to trade only in USD .
It is totally b…. that the U.S claims to be the champion of the free capitalist economy while at the same time strongly in defense of the USD’s monopoly as the World’s Reserve Currency – a role not elected by others but usurped by the U.S. at the Bretton Woods Agreement .

vinnan

When was the last time the world listened to the UN?

mut

The euro and then yen have replaced the USD in some instances. As long as there is perceived value in the USD, it will still be well regarded as a benchmark of value. But if there is institutional pressure by the combined economic forces operating alongside the US economy for a departure from this practise (I think it’s about time!) then the US might be in for a rough ride. The American shouldn’t have a complete disregard for the valuation of their currency and push this even further. Fiscal discipline and prudence is no longer something they can ignore. How… Read more »

wira

Consider this.

How many countries left on this earth today would go to difficult wars, alone if needed, to defend its interests and money ?

I still put my trust in the US dollar as a world currency.

Ganesh

That is why Kutty said to trade oil in Euro. It is better also to trade and hold in a currency that is the national currency of more than 10 countries.

BN

Dollar collapse would reflect in other (not so transparent or inflated) economies and currency, it is global meltdown. Not just the USA. So what is the difference? USA is still the place for innovation, new discoveries and technology. I definitely not fly Trans-Continent with my family on a Chinese made plane. My bet is still on USA technology and hence currency.

My bet is still on the dollar.

Obsever

If the US dollar collapses, most countries’ economies would collapse as well. China, for instance, which buys so much US debt, would have its economy collapse as well because it is so intrinsically linked to the US. Many nations continue to hold much of their reserve in the US dollar. It is in the self-interest of everyone to prop up the dollar because things are so intertwined in the world today in terms of the country.

So I appreciate your doom-and-gloom about the US economy, but I think you highly underestimate the resilience of the US economy.

kittykat46

The whole issue will ultimately be driven simply by market economics.

As long as the US economy remains the world’s largest, most international trade will be denominated in US dollars. The international reserve currency will follow quite naturally.

If some basket of currencies is imposed by treaty, for example, it would simply get referenced back to the Dollar, which would put us back to square one.

Once the US economy is no longer the world’s largest, perhaps as a result of future catastrophic economic collapse, the market will switch to something else.