Friday, January 04, 2013

‘Bye bye Uncle Sam? Not yet.’

The idea of a supranational currency sounds good. But the practicality of it is the biggest question

The US supremacy has been a threat to the world specially the developing world for quite sometime now. US in its global approach has developed many enemies on the way. US is a hurdle in growth is the new notion amongst top developing countries and the recent sub-prime crisis has made the matters worse. So strong is the feeling that Brazil, Russia and China are indicating that they would come together to replace Dollar as the standard currency with IMF’s Special Drawing Rights (SDR). The Russian President Dimitriv Medvedev reiterated that the dollar should be replaced by more stable currency, a supranational currency. “The current situation demands a bigger number of currencies which could be used for investing money and by banks, citizens and states” Medvedev said.

While Medvedev wanted Ruble to take the place of Dollar, other nations like China demand SDRs should replace the Dollar as the standard currency since the Bretton Woods agreement has shown signs of falling after the crisis. Now that the BRIC summit comes closer (June 16), supranational currency would be the priority of the meeting. Since Brazil, Russia and China have already shown their consent to the change, this would put pressure on India as well to make some strong decisions.

After the news, there was a clear panic amongst the investors and as Kathy Lien, Director of Currency Research, GFT, a currency trading platform says, “The only thing that can save the situation in this regard is some statement from the Central Banks.”

Source : IIPM Editorial, 2012.
An Initiative of IIPMMalay Chaudhuri
For More IIPM Info, Visit below mentioned IIPM articles.