World Bank to Create $50 Billion Trade Fund — U.S. Dollar Not Threatened
No real threat to the U.S. dollar as the world’s reserve currency?
The news ahead of the G20 summit later this week is all about a proposal from China — and backed by Russia — to create a new reserve currency system in the form of special drawing rights on the IMF.
However, despite all of the play it is getting, the idea hasn’t been well-received by most of the economically developed nations. At any rate, reports FX Street, the U.S. dollar is likely safe as the world’s reserve currency:
There looks to be little, if any, credible threat to the US dollar’s status as world reserve currency. Even if talk on SDRs does gain momentum at or after the G20, there’s still little chance of dethroning the dollar without more detailed proposals with legitimate
World Bank President Robert Zoellick said recently, "to create a reserve currency you need to have more than a summit or a meeting, you have to create financial markets where people feel comfortable moving in and out of the currency."
Even though World Bank is planning to create a $50 billion trade fund, it is unlikely to have any sort of impact on reserve currency status. It is merely something designed to help ease the flow of money through the global financial system.
See Also
- U.S. Dollar and Forex Trading
FX market and world currencies
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