Wednesday, July 29, 2009

Replace US dollar by “super-sovereign” reserve currency

American economic hegemony is coming under attack from all directions. It seems that it will be impossible for Americans to sustain it further. China’s Central Bank in its report has repeated its demand for US dollar to be replaced by a “super-sovereign” reserve currency.

“An international monetary system dominated by a single sovereign currency has intensified the concentration of risk and the spread of the crisis,” according to the People's Bank of China (PBOC).

“To avoid intrinsic shortcomings in using a sovereign currency as a reserve currency, we need to create an international reserve currency that is divorced from sovereign states and can maintain a stable value over the long term,” the PBOC report further added.

Previously, China’s Central bank Chief Zhou Xiaochuan has called for a new reserve currency on many occasions.

Russian President Dmitry Medvedev also demanded to dump US dollar as reserve currency. He also blamed USA for causing current financial crisis.

It is likely that China and other countries will increase pressure on USA to replace US dollar as the reserve currency. This will become a final nail in USA’s economic coffin.