Bankruptcy

Russia and China to Start Moving out of Dollars

By mcbride

As has been previously noted, there is a move afoot for some countries to move out of US dollars.  With the increasing need for sales of US bonds, to pay for all the newly created TARP debt, this is an important change, if it actually occurs.  One question arises: since all countries and the IMF seem to be pursuing the same Keynesian policies, then which currency offers more strength than the US dollar?  ?Premier Wen Jiabao called in March for the U.S. ?to guarantee the safety of China?s assets? and central bank Governor Zhou Xiaochuan proposed a new global currency to reduce reliance on the dollar. China, Russia and Brazil are among a handful of nations that have expressed interest in purchasing the securities. China is ?actively? considering buying as much as $50 billion of the IMF bonds, the State Administration of Foreign Exchange said last week. IMF securities would give countries a different way to contribute to the fund and are unlike traditional bonds because they pay an interest rate pegged to the IMF?s basket of currencies, known as Special Drawing Rights. Ulyukayev said Russia will cut the share of U.S. Treasuries ?because a window of opportunity for working with other instruments is opening,? according to Interfax news wire.?

Here is the link: http://www.bloomberg.com/apps/news?pid=20601087&sid=amZ.L9jX.u5g

Michael

Full post as published by Texas Lawyer Blog on June 10, 2009 (boomark / email).