A Global Currency

In an essay published Monday, the head of China’s central bank proposed a plan to displace the American dollar as the world’s standard and replace it with a global reserve currency operated from the International Monetary Fund.

What do you guys think of this? With increasing globalization I think it would make sense.

O crap, they are actually serious about pushing this. Man with all the U.S. debt China owns this might actually be pushed through …

China’s calls for a new international reserve currency to replace the U.S. dollar are more than mere bluster and could likely lead the debate over the future of the global foreign-exchange system, analysts say.

“By proposing such a sweeping reform, China is demonstrating its growing influence in reshaping the global monetary system, and is now on offensive in the debate of who is responsible for the global imbalances,” Deutsche Bank’s chief economist for Greater China Jun Ma said in a note to clients Wednesday.

The comments by People’s Bank of China Gov. Zhou Xiaochuan are setting a framework for talks on how to resolve the huge trade imbalances between China and the U.S., analysts said.

In the past, China has been blamed for its large trade surplus by officials in the U.S. and elsewhere, who see the yuan as undervalued.

“China has effectively set the agenda for the G20 leaders’ summit,” wrote SocGen economists in a note Tuesday, referring to next week’s meeting of finance chiefs from the Group of 20 leading economies in London.

China and Argentina have agreed to set up a 70 billion yuan ($10.24 billion) currency swap system that will enable trade between the two nations to be settled in the Chinese currency, the state-run Xinhua News Agency reported Monday.

The agreement, the largest ever between China and a Latin-American country, was signed Sunday in Columbia, Xinhua reported.

The agreement marks Argentina as the fifth nation to sign currency swap agreements with China following similar agreements with South Korea, Malaysia, Belarus and Indonesia. China ranks as Argentina’s second-largest trade partner.

Separately, China and Argentina are set to push for changes to the international financial system at the Group of 20 leader’s summit in London this week, Xinhua reported.

The two nations will seek a bigger representation of emerging nations at reform talks. The report did not specify what reform issues would be discussed.

Well basically its have relatively few economic implications for the rest of the world but this is a huge step forward in China’s agenda to gain more authority in the global affairs.

Yes this will making trading between the two countries easier but come on, they are on the opposite sides of their respective continents. I see no cost effective reasons for them to be trading partners.

This is more a thumbed nose at the Americans. Venezuela’s almost communist but democratically elected socialist party does anything it can to hurt the US image.

However I think if the global recession persists we can expect some very aggressive moves from China to continue its agenda. On the pure speculation side, China does own a lot of US debt and the cutting of interest rates could be effecting them.