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China And Russia Hint At Dropping US Dollar
Vladimir Putin joins scores of other heads of state in
calling for complete overhaul of global financial system
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Reports from the Russian media suggest that the country is on
the verge of an agreement with China to renounce the US dollar
and stop using it in international settlements.
"The recent meeting between Russian Prime Minister
Vladimir Putin and his Chinese counterpart, Wen Jiabao, created
a financial sensation," reports
RIA Novosti.
"Wen said that the two nations could withstand
the global financial crisis if they joined forces; Putin urged
him to go farther and stop using U.S. dollars in Russian-Chinese
settlements."
Russia
Today reports that Putin has also called for a complete
overhaul of the world’s financial system to "end monopoly
in world finance".
The move comes as the dollar is rebounding and gaining
strength for the first time in months, leading some to suspect
the move is part of a wider political agenda.
Igor Nikolayev, chief strategic analyst at FBK private
auditing firm told RIA Novosti "I think it was a political
statement rather than an economic decision. There is a dominant
public sentiment that the United States is the source of all evil,
so let's stop using the dollar,".
(Article continues below)
Despite recent gains, negative dollar sentiment
has now become global. Over the past year the dollar has hit
all time lows, mainly due to continued rate cuts
and injections of liquidity by the Federal Reserve.
China has threatened repeatedly to use the so called
"nuclear option" and liquidate its vast holding of US
treasuries in response to continued pressure on the Communist
state to force a yuan revaluation. According to a
reports earlier this year, such an event "could
trigger a dollar crash" which would now have disastrous consequences
for an American economy already firmly in a recession.
Questions remain, however, over what would take
the place of the dollar as an international currency, with China
not likely to accept use the ruble or the Euro and Russia unlikely
to agree to use the yuan.
Vladimir Putin's call for a new financial world
order echoes that of British
Prime Minister Gordon Brown, who wants dozens of
world leaders to meet at a "Bretton Woods II" summit
where they would rewrite the rules of international finance encompassing
"very large and very radical changes".
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