In short, the West desperately wants to maintain the dollar and euro as reserve currencies.
The only proven alternative to a global financial system without reserve currencies is the international gold standard.
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It also called for stability of the dollar and euro, both being major reserve currencies in the BRICs.
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Lehrman places a lot of focus on the notion of international reserve currencies.
Alternatively, they might seek to avoid the consequences of a dollar fall, by diversifying into other reserve currencies, such as the euro.
Soon the market could be seeing a better bid scenario of the historical reserve currencies by hedge funds (USD, JPY and CHF).
Stiglitz predicted in his book, Making Globalization Work, that eventually reserve currencies such as dollar would depreciate, making them ill-suited for reserves.
Just as the major advanced economies need to keep working to preserve stability among reserve currencies, emerging economies need to allow for currencies that are market-driven.
For most countries, the interest cost of domestic borrowing is greater than the return on foreign reserves, because reserve currencies tend to pay lower interest rates.
One possibility is a system with several competing reserve currencies.
If the Chinese yuan were to appreciate by 10% against the dollar (and other reserve currencies), China would suffer a capital loss worth almost 3% of GDP, the study found.
Tilting away from CBanks and focusing on reserve currencies, apparently the IMF is considering using the twin commodity currencies of CAD and AUD in its list of reserve currency pairs.
Lehrman (with whom this writer is professionally associated via American Principles Project and the Lehrman Institute) has provided with The True Gold Standard: A Monetary Reform Plan Without Official Reserve Currencies.
Reserve currencies, the dollar being the most widely used one, were embraced as a safe haven during the global financial meltdown, which allowed the U.S. government to borrow at negative real interest rates.
Some people have been asking me what I think of the gold standard proposal by Lewis Lehrman, as expressed in his most recent book The True Gold Standard: A Monetary Reform Plan Without Official Reserve Currencies.
Lehrman published the fruit of 40 years of study and thought, study that began with his tutelage by French monetary statesman Jacques Rueff, of The True Gold Standard A Monetary Reform Plan Without Official Reserve Currencies.
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Scandinavian countries and Switzerland are probably the only true AAA nations left, but their economies are not big enough for them to field reserve currencies, and in fact Switzerland is trying to devalue its currency, as its exporters are hurting from the highly appreciated Swiss franc.
Not only would such an arrangement generate countervailing forces to doubly ensure that neither the U.S. nor Europe went off gold unilaterally in the future, it also immediately would create two competitive reserve currencies, which would bring market forces to bear to prevent shenanigans by either central bank or finance ministry and provide an indirect restraint on parliamentary borrowing.
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Many do not believe that both these currencies fit the global criteria for reserve currency status.
Of the seven currencies that make up the Federal Reserve's major-currency index, only one (the Australian dollar) is within 10% of its fair value.
It main regulator is the U.S. Federal Reserve Bank which works with the other central banks whose currencies are included.
China has stated interest in diversifying its currency and debt holdings in its foreign reserve accounts by buying up other BRIC assets, mainly currencies in Russia, India and Brazil, one of the strongest and most stable currencies in the Americas.
The Federal Reserve and the ECB are both horrible stewards of their respective currencies.
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While the markets seem to expect further action by the US Federal Reserve which could weaken the dollar (and has against most currencies), the latest meeting minutes from the Monetary Policy Committee of the Bank of England also suggest some members of that group leaning toward further monetary easing.
Lindsey, a former member of the Board of Governors of the Federal Reserve System, is open to the idea of free-market currencies, and there is a growing movement to incorporate gold into the global monetary system.
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Both the Reserve Bank of Russia and SNB have already declared and allotted room for both currencies over the past 18-months.
The U.S. dollar has been sliding against almost all world currencies as markets prepare for another round of quantitative easing by the Federal Reserve Board.
The dollar's rally had weighed on Asian currencies this year amid growing expectations that the U.S. Federal Reserve will pare its bond-buying program due to signs of recovery in the U.S. economy, reducing the attractiveness of high-yielding currencies.
With many emerging nations linking their currencies to the US dollar, the impact of looser policy from the Federal Reserve quickly leaked out to other parts of the world which, unlike the US, were not heavily affected by the financial crisis.
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That might slightly improve some currencies but will have little impact on the gold price unless surreptitious intervention by the (Federal Reserve) occurs.
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