Now Russia’s Promoting a New World Currency

The smackdowns of the U.S. dollar continue. This time Russian President Medvedev is pounding on the table.

Medvedev is basically echoing the rants that have come out of China about the supremacy of the dollar and proposes the same fantasy of some supra-national currency oriented around the IMF and its special drawing rights units. Until that day comes he suggested that coming out of the crisis banks should look at holding some reserves in regional currencies other than the dollar — he suggests the ruble.

Ah, yes, hold those rubles. Nothing like investing in the currency of a country that’s essentially a criminal enterprise.

But back to the larger point. If China, Russia and others don’t like the dollar and want to go about setting up a new regime then have at it, boys. All they have to do is come up with a credible alternative and I rather suspect that they will have no trouble at all lining up takers. There’s just one little problem.

If you recall, back in April the G-20 all met in London and agreed to move forward with major new commitments to the IMF. It was always a bit vague as to how much everyone was going to pony up but the figure of a trillion dollars in total was bandied about. This would make the IMF a much bigger player in the save the world game and presumably open the door for further strengthening its role as the purveyor of the supra-currency to come.

As usual, when the rubber meets the road reality is much less than what was advertised. In fact, though China and Russia have made noises about putting up some money, to date no one has seen the colour of their money. They keep moaning about reform of governance at the IMF — translation we want a bigger say– but you usually get into the game by anteing up first not after everyone else acquiesces to your demands.

At this rate it’s going to be a long time before the IMF is ready to take over as the new world reserve currency.

more: here and here

About Tom Lindmark 401 Articles

I’m not sure that credentials mean much when it comes to writing about things but people seem to want to see them, so briefly here are mine. I have an undergraduate degree in economics from an undistinguished Midwestern university and masters in international business from an equally undistinguished Southwestern University. I spent a number of years working for large banks lending to lots of different industries. For the past few years, I’ve been engaged in real estate finance – primarily for commercial projects. Like a lot of other finance guys, I’m looking for a job at this point in time.

Given all of that, I suggest that you take what I write with the appropriate grain of salt. I try and figure out what’s behind the news but suspect that I’m often delusional. Nevertheless, I keep throwing things out there and occasionally it sticks. I do read the comments that readers leave and to the extent I can reply to them. I also reply to all emails so feel free to contact me if you want to discuss something at more length. Oh, I also have a very thick skin, so if you disagree feel free to say so.

Enjoy what I write and let me know when I’m off base – I probably won’t agree with you but don’t be shy.

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