On the heels of the Kremlin recently calling for a new supernational reserve currency, the Chinese Â Central Bank has proposed a new global currency system to be maintained by the International Monetary Fund.
Chinaâ€™s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
In an essay posted on the Peopleâ€™s Bank of Chinaâ€™s website, Zhou Xiaochuan, the central bankâ€™s governor, said the goal would be to create a reserve currency â€œthat is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currenciesâ€.
Wow, not even 24 hours after Treasury Secretary Tim Geitner announced a $1 Trillion Toxis Asset Buy Out Program, and already the Chinese are calling for an end to dollar domination globally. Perhaps they know something we don’t?
â€œThis is a clear sign that China, as the largest holder of US dollar financial assets, is concerned about the potential inflationary risk of the US Federal Reserve printing money,â€ said Qu Hongbin, chief China economist for HSBC.
China, it seems, is banking on inflation resulting from this new round of stimulus and bailouts. Time to start moving out of cash and into hard assets — your only protection when inflation takes hold.