China Attacks US Dollar At G8 Summit
Despite making previous statements that it wasn’t out to divest the U.S. dollar of it’s current world reserve currency status, China just stepped up its attack against the larger global currency system.
Technically, Chinese State Councilor Dai Bingguo didn’t mention the dollar specifically at the G8 and G5 (group of emerging nations currently composed of China, India, Brazil, South Africa and Mexico), but he once again voiced his disapproval with the state of the reserve currency as it stands now, and called for some form of diversification.
“We should have a better system for reserve currency issuance and regulation, so that we can maintain relative stability of major reserve currencies’ exchange rates and promote a diversified and rational international reserve currency system,” he said at the summit via foreign ministry spokesman Ma Zhaoxu.
Fortunately for the U.S., but not so much for less “significant” countries out there whose own governments, economies and currencies are still stabilizing, British Prime Minister Gordon Brown jumped in with his own two cents. And his two cents are worth more than China’s at this point.
“In this present situation as we’re trying to get out of a deep recession, I don’t want to give the impression that there is some major change about to happen around the corner that suggests that the present arrangements are destabilized.”
While I agree with China’s official stance on the reserve currency situation and I sympathize with them as they struggle with the ramifications of the U.S. spending problem, I’m going to have to side for the time being with Prime Minister Brown.
Despite the fiscal habits of United States presidents and congress people both now and in the past, economies across the globe are too fragile to make any drastic moves such as tampering with the reserve currency… for the time being.
The U.S. will have to face the consequences of its actions in this matter eventually, as I firmly believe that it should. But for the here and now, our currency remains quite safe from Chinese threats and disapproval.
Thursday, July 09, 2009 - by Jeannette Di Louie, Assistant Editor, Mt. Vernon Research
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