Chinese G-20 host wants to replace dollar as reserve currency

March 30, 2011

Clearly the Chinese want to have their non-convertable RMB cake and eat it too.  But how can they reap the riches of seigniorage for the yuan without opening it to international trading and - ahem - speculation? A Chinese state-run think tank (which is now hosting a G-20 seminar in Nanjing to study international exchange rates) published a paper Thursday blaming the global financial crisis mostly on the U.S. dollar, explained that “dollar dominance has caused irregular flows of global capital and abnormal exchange-rate fluctuations,” and urged its replacement with a basket of “multiple international reserve currencies.”   No doubt the idea is to keep the yuan in the background - and under tight control in Hongkong and Shanghai - as a silent arbiter of global exchanges.  At least, that's how I read it.



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