http://eliel42.bloghostpro.com/ it is the theory which decides what can be observed - einstein en http://eliel42.bloghostpro.com/2009/03/23/china-calls-for-new-reserve-currency.html FT.com / Asia-Pacific - China calls on behalf of new reserve currency By Jamil Anderlini in Beijing Published: March 23 2009 12:16 | Last updated: March 24 2009 00:06 China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund. In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations as well as is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”. Analysts said the proposal was an indication of Beijing’s fears that actions being taken to save the domestic US economy would have a negative impact on China. “This is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,” said Qu Hongbin, chief China economist on behalf of HSBC. Although Mr Zhou did not draw attention to the US dollar, the essay gave a pointed critique of the current dollar-dominated monetary system. “The outbreak of the [current] crisis as well as its spillover to the entire world reflected the inherent vulnerabilities as well as systemic risks in the existing international monetary system,” Mr Zhou wrote. China has little choice but to hold the bulk of its $2,000bn of foreign exchange reserves in US dollars, as well as this is unlikely to modification in the near future. To replace the current system, Mr Zhou suggested expanding the role of special drawing rights, which were introduced by the IMF in 1969 to support the Bretton Woods fixed exchange rate regime but became less relevant once that collapsed in the 1970s. Falling greenback fuels BRIC dollar reserve rethink | Special Coverage | Reuters Chinese central bank chief Zhou Xiaochuan said the SDRs, created by the IMF as international reserve assets in 1965, could be used as a super-sovereign reserve currency, eventually displacing the dollar. His feedback come a week at the end of Russia said it would put forward a proposal on behalf of the creation of a new reserve currency issued by international financial institutions at the G20 meeting in April. Russia said it had the broad support of its fellow BRIC countries — Brazil, India as well as China — as well as South Korea as well as South Africa on behalf of its proposal. The push underscores growing concerns among emerging-market leaders about the long-term value of the dollar. The dollar saw its biggest weekly slide since 1985 .DXY last week at the end of the Federal Reserve’s decision to buy long-term government debt raised the specter of oversupply in dollars. Mon, 23 Mar 2009 06:49:57 -0400 eliel42