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China Calls For International Oversight Of The US Dollar, Suggests Single Global Currency Replace It

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Alexander Higgins
Aug 7, 2011

China is demanding “international supervision over the U.S. dollar” and says they are looking at the option of creating a new single global currency to replace the dollar altogether.

China has published an article in its stated owned Xinhua news agency that rails against the United States for losing its AAA credit rating and has issued a series of demands to U.S. policy makers and the international community.

China begins by railing against the “arrogance and cynicism from some Western commentators” in regard to the credit rating downgrade of U.S. debt that was issued by China’s Dagong Global credit rating agency last year and goes on to state that they have the right to  demand the U.S. address its debt problem to protect the Chinese dollar.

In concluding the article China is calling upon the international community to intervene with a program of “international supervision over the U.S dollar” while indicating they are looking at the option of creating a global currency to replace the dollar altogether.

China Calls For International Oversight Of The US Dollar, Suggests Single Global Currency Replace It  China Calls For International Supervision Over US Dollar
China Calls For International Supervision Over The US Dollar And New, Single Global Currency To Replace It

Zero Hedge reports:

Gloating China Says “Has Every Right To Demand US Address Its Debt Problem”, Asks For New Global Reserve Currency

China Calls For International Oversight Of The US Dollar, Suggests Single Global Currency Replace It  picture 5Submitted by Tyler Durden
08/06/2011 11:21 -0400

China has released a scathing op-ed in Xinhua, the official Chinese news agency, in which the authors waste no time to humiliate a “debt-ridden Uncle Sam” following the S&P downgrade, in the most violent surge in the recent war of words between the ascendent and descendent superpowers. Some choice selections: “Dagong Global, a fledgling Chinese rating agency, degraded the U.S. treasury bonds late last year, yet its move was met then with a sense of arrogance and cynicism from some Western commentators. Now S&P has proved what its Chinese counterpart has done is nothing but telling the global investors the ugly truth”, “China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets.” It doesnt stop there, “[the US] should also stop its old practice of letting its domestic electoral politics take the global economy hostage and rely on the deep pockets of major surplus countries to make up for its perennial deficits.” China takes the opportunity to give the US a little lecture on a broken way of life: “All Americans, both beltway politicians and those on Main Street, have to do some serious soul-searching to bring their country back from a potential financial abyss.” And lastly, China once again gets back to its pissing contest about whose reserve currency is bigger: “International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.” Just wild fun. Read the whole thing below.

From Xinhua:

After historic downgrade, U.S. must address its chronic debt problems

The days when the debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appeared to be numbered as its triple A-credit rating was slashed by Standard & Poor’s (S&P) for the first time on Friday.

Though the U.S. Treasury promptly challenged the unprecedented downgrade, many outside the United States believe the credit rating cut is an overdue bill that America has to pay for its own debt addition and the short-sighted political wrangling in Washington.

Dagong Global, a fledgling Chinese rating agency, degraded the U.S. treasury bonds late last year, yet its move was met then with a sense of arrogance and cynicism from some Western commentators. Now S&P has proved what its Chinese counterpart has done is nothing but telling the global investors the ugly truth.

China, the largest creditor of the world’s sole superpower, has every right now to demand the United States to address its structural debt problems and ensure the safety of China’s dollar assets.

To cure its addiction to debts, the United States has to reestablish the common sense principle that one should live within its means.

S&P has already indicated that more credit downgrades may still follow. Thus, if no substantial cuts were made to the U.S. gigantic military expenditure and bloated social welfare costs, the downgrade would prove to be only a prelude to more devastating credit rating cuts, which will further roil the global financial markets all along the way.

Moreover, the spluttering world economic recovery would be very likely to be undermined and fresh rounds of financial turmoil could come back to haunt us all.

The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone.

It should also stop its old practice of letting its domestic electoral politics take the global economy hostage and rely on the deep pockets of major surplus countries to make up for its perennial deficits.

A little self-discipline would not be too uncomfortable for the United States, the world’s largest economy and issuer of international reserve currency, to bear.

  • A d v e r t i s e m e n t

Though chances for a full-blown U.S. default are still slim now, the S&P downgrade serves as another warning shot about the long-term sustainability of the U.S. government finances.

International supervision over the issue of U.S. dollars should be introduced and a new, stable and secured global reserve currency may also be an option to avert a catastrophe caused by any single country.

For centuries, it was the exuberant energy and innovation that has sustained America’s role in the world and maintained investors’ confidence in dollar assets. But now, mounting debts and ridiculous political wrestling in Washington have damaged America’s image abroad.

All Americans, both beltway politicians and those on Main Street, have to do some serious soul-searching to bring their country back from a potential financial abyss.

The events in this video look more and more likely every day.

Reuters also reported on the Xinhua article and added that China will now be forced to dump the U.S. dollar.

The downgrade of U.S. credit rating is expect to take a major toll on China’s over $2 trillion in investments in the U.S. dollar.

With no where else to put all of that money China will be forced to invest it into a one world currency.

Reuters reports:

China blasts U.S. over debt problems, calls for dollar oversight

SHANGHAI | Sat Aug 6, 2011 2:35am EDT

(Reuters) – China roundly condemned the United States for its “debt addiction” and “short sighted” political wrangling and said the world needed a new stable global reserve currency.

In a harshly-worded commentary by the official Xinhua news agency on Saturday, China gave its first official comments on the United States losing its gilded AAA long-term credit rating from Standard & Poor’s.

[...]

Chinese economists said the U.S. credit rating downgrade posed a great risk to financial markets and they expected it to prompt China, the world’s biggest holder of U.S. Treasuries, to accelerate the diversification of its holdings.

[...]

“China will be forced to consider other investments for its reserves. U.S. Treasuries aren’t as safe anymore. There is a class of assets out there that are more risky than AAA, but less risky than AA+. China didn’t consider these investments before, but now it would be forced to do so,” Li said.

[...]

Source: Reuters

 

This article was posted: Sunday, August 7, 2011 at 5:24 am





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