(Reuters)In remarks on the People's Bank of China website yesterday (23-Mar in China), governor Zhou Xiaochuan outlines how the IMF's special drawing rights could become the world's main reserve currency. Citing "institutional flaws" with the current system, the comments do not explicitly mention the US dollar, which would be replaced. Zhou says global liquidity would be enhanced by not having a country's currency as the yardstick for global trade.
Bullionmark comment:
Momentum is accelerating. The G20 meeting in London April 2nd is likely to be the tipping point where China and Russia finally hold the US to account over the US dollar reserve currency status. Don't expect the US to give this up without a fight. Lets hope the tensions remain economic and don't deteriorate into military conflict. Remember as the reserve currency of the world and with no gold backing the US Treasury and Fed can essentially print all the money they want (and havent Tim and Ben done this so well recently. This is exit strategy for the US from its current woes. The next few months promise to be the most interesting in currency markets since Nixon removed the dollar and gold link in 1971, maybe even the original Bretton Woods in 1944. Stay tuned.
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