Friday, January 4, 2013

SUPRANATIONAL CURRENCY: BRIC

The idea of a supranational currency sounds good. But the practicality of it is the biggest question

Nothing of that happened, however, good news from American economy has pushed the Dollar up against all the major currencies.

And this precisely shows the biggest hurdle in the way of replacing the Dollar. Most of the trade that happens uses Dollar as the currency and the amount of Dollar in the forex reserves of the world is much higher than any another currency.

Even experts within Russia believe that shifting away from Dollar is not going to be as easy as is being potrayed by the emerging giants. The first problem is that a change would require a long process and would be too cumbersome. Some of the countries, most of them being developing ones, are not ready to see such kind of transformation. Besides, the US must agree to any such kind of change. And by any means, it would not be ready as this would soften its clutches on world finances and thus reduce its importance. And Dollar being the most stable and credible currency at the moment, shifting during this recession time is the most stupid idea. In short, if non-dependence on Dollar is to happen, mere groupism would not do. It requires more fundamental changes than what have been proposed till now.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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