p2pnet news view | Off Topic:- China reckons it has the answer to the world economic crisis.
Create a single world currency.
When there were concerns about Fannie’s and Freddie’s finances, “especially on the part of foreign investors such as China,” the US, “bailed them out and wound up placing them into conservatorship,” says Barron’s, continuing:
“More recently, Chinese officials have voiced concern about their massive holdings of U.S. Treasuries and dollar assets in general.
“A couple of weeks ago, Premier Wen Jiabao expressed concern about the safety of U.S. Treasury securities. Last month, a Chinese official put it bluntly: “We hate you guys. Once you start issuing $1 trillion-$2 trillion, we know the dollar is going to depreciate.” But given the lack of viable alternatives, they’re stuck buying Treasuries, he said.
“Now comes a suggestion from the head of China’s central bank for an alternative to the dollar, echoing a similar proposal made previously by Russia. Those nations proposed expanding the use of the International Monetary Fund’s Special Drawing Rights as a substitute for dollars. SDRs, based on a basket of currencies, have never gained much usage except for IMF transactions.”
But US president Barack Obama isn’t at all keen on the idea.
Rejecting calls for a new global currency, he says the US dollar is “extraordinarily strong” because investors are confident the US can lead a worldwide recovery, says Bloomberg News, quoting him as stating:
“There is a great deal of confidence that ultimately, although we are going through a rough patch, that the prospects for the world economy are very, very strong.”
However, Chinese central bank Governor Zhou Xiaochuan (right) wants the International Monetary Fund to create a ‘super- sovereign reserve currency’.
This, “may signal China`s ambitions for a leadership role at next week`s Group of 20 summit, economists said,” the story states, continuing:
“They followed Premier Wen Jiabao’s call on March 13 for the U.S. ‘to guarantee the safety of China’s assets’.”
“Next week, the Group of 20 nations will discuss the unprecedented stresses facing the world’s economy. President Obama may not be able to dismiss calls for a new monetary order as easily as he did at Tuesday’s press conference, even if the dollar is unlikely to be supplanted for some years to come.”
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