US Downgrade: World Is Calling Even Louder For A New Global Currency

The American Dream
Aug 15, 2011

For decades, the U.S. economy was so dominant compared to the rest of the world that nobody really even challenged the status of the U.S. dollar as the reserve currency of the world.  But now that U.S. government debt has been downgraded, the U.S. dollar is showing significant weakness and the U.S. economy continues to crumble, the rest of the world is questioning whether the U.S. dollar should be allowed to continue to have such a privileged position in the global marketplace. 

Politicians all over the world are now openly calling for a new global currency to replace the U.S. dollar in international trade.  In fact, we are already seeing a shift away from the dollar in many areas of the globe.  A decade ago, the U.S. dollar made up approximately 70% of all foreign exchange reserves around the world.  Today, that figure is down to about 60%, and it continues to fall.  As the debt problems of the U.S. government get even deeper, and as the U.S. dollar loses even more strength, the calls for a truly global currency are going to grow even louder.

Right now, the global financial system is still based on the U.S. dollar to a very large degree.  But dissatisfaction with the status quo is growing around the world.  Many are blaming the United States for the massive financial problems that we have had in recent years.

Many global politicians these days seem quite eager to jump on any chance to criticize the U.S. financial system.  In particular, the recent downgrade of long-term U.S. government debt by S&P has provided plenty of ammunition for international proponents of a new global currency.

The largest bank in Saudi Arabia, National Commercial Bank, recently had the following to say about the U.S. dollar….

“The size of the US economy and its treasury market and the dollar’s status as a reserve currency make it impossible to find a historical parallel for the current situation. However, being the world’s reserve currency, the US dollar now appears inconsistent with an AA+ rating.”

China’s official Xinhua news agency has been brutally attacking the U.S. financial system in recent days.  The following is one example….

“The only way the Americans have come up with to improve economic growth has been to take on new loans to repay the old ones.”

In fact, Xinhua has even gone so far to suggest that U.S. monetary policy should be under “international supervision” and that a new global reserve currency should be created….

“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.”

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