New international currency requires the Euro

JulieW · Dec 18, 2013

Fascinating point of view and food for thought for anyone thinking big picture gold, exits and their holdings.

http://www.leap2020.eu/GEAB-N-80-is...nce-2014-the-big-American-retreat_a15224.html

Things are moving very quickly on the monetary front and all the efforts undertaken so far will attempt to crystallise in 2014. The following five examples are indicative of the ongoing developments.

Kuwait, Qatar, Bahrain and Saudi Arabia are launching their common currency at the end of December (3). For the moment this will be pegged to the Dollar; but these countries' trade with the United States is increasingly less significant. In this case, why peg it to the Dollar? Simply to avoid the United States putting a spoke in the wheel, in the knowledge that a simple political decision will, in the near future, allow a swaying towards a more robust solution of a basket of currencies unconnected to the American currency (4). Note, moreover, that five African countries (Kenya, Uganda, Tanzania, Rwanda and Burundi) have also agreed on a common currency (5)

Bitcoin is attracting the greedy (6), panicking the markets and central banks which are trying to regulate it (7). If its recent moves are mainly due to speculation as we analysed in the GEAB n79, nevertheless its success is very revealing of current developments: distrust of fiat currencies (primarily the Dollar), the need for a currency which can't be "manipulated" by central banks, decentralised, not dominated by a country or an entity, dematerialised This is a first attempt, not perfect, with high volatility (due to low volume and fixed monetary creation), and which comes up against the reluctance of various legislators and, therefore, which risks disappearing or being marginalised in the near future. Nevertheless, the characteristics of this virtual currency should be taken into account in the thinking on the innovation of a new international currency exchange.

Gold, as we have repeatedly seen, is moving from West to East at a feverish pace (8), gradually supporting the Yuan's international legitimacy. Even if there is no doubt that a gold standard won't see the light of day, hardly appropriate to the needs of our time, even if the new international monetary system, whatever it may be, probably won't be linked to gold (9), its possession remains an important vote of confidence in the current monetary chaos.

Truly international rating agencies (or multipolar ) are emerging (10) with the objective of breaking the monopoly of the Anglo-Saxon agencies. This is anything but a trivial development as the agencies influence markets, especially on the assessment of national economies Of course this isn't a direct monetary factor but it also contributes in questioning Dollar hegemony. (11)

The Yuan's use for import credit payments has just doubled the Euro's and is now in second place in the worldquite a symbol (12). Swap agreements allowing trade in local currencies have been concluded with almost all regions of the world. As a result, the proportion of trade with China paid in Yuan has gone from 12% to 20% in less than a year (13) and the total of Yuan denominated international trade should increase by 50% in 2014 (14) This spectacular race is all the more impressive since the Chinese currency still isn't freely convertible and is the sign of the irresistible attraction of the country's economy.

Nevertheless, if one excludes the United States based on a status quo in their favour (15), a truly international system can't be created without the Eurozone, whose currency accounts for around 30% of world trade and reserves (16), the number two international currency far ahead of its pursuers. Yet, and we analysed it at length in the last GEAB issue, the Euro remains more a support for the Dollar than an alternative, in particular by its inability to impose itself on its own international trade instead of the Dollar, which leads to this paradox: the huge European trade dynamic directly serves Dollar sustainability (17). The shift towards a multipolar monetary system therefore still depends, for the time being, on Euroland's decision to abandon the Dollar and join the bandwagon of the inevitable current monetary change, led primarily by China.

Banking union which is slowly progressing (18) is the opportunity to strengthen the single currency and make it play the true role to which it lays claim when European decision-makers of another era (19) invented it; as well as the beneficial impact of the 2014 European elections which will distance the Eurozone from the EU a little further. The end of 2014 or, at the latest, 2015 is, therefore, the date when the Euro will finally play its part in exiting the international monetary system from the Dollar's rut.
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p.s. 9 above

9 Gold can be used to support a currency in the process of international (re-) legitimisation but once it reaches international status, it de facto recreates confidence in currencies. Gold is then relegated to its role of "barbarous relic", leaving currencies to rely on the true riches of modern times: energy, production quantified as wealth, etc The collapse of the economy's actual productivity (US) on which the international currency (Dollar) was based explains the huge monetary crisis in the world and which the Yuan's emergence is largely meeting, providing the base for a re-securing of currencies to economies. The problem is that in reaching international status, the Yuan will cause the Dollar and the US' virtual economy to collapse, which will inevitably affect the rest of the planet. This is why, at this stage still, LEAP is continuing to advise its readers to diversify part of their assets into physical gold to lessen the shocks in view in 2014, but one must also know the time to sell.
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pmbug · Dec 18, 2013

With respect to the GCC common currency, FWIW:

The Gulf Monetary Council has denied media reports concerning the finalisation of the launch of a single currency for the Gulf countries.

Earlier this week, media reports claimed that four GCC countries will announce a common currency by the end of this year. The currency would reportedly be pegged to the dollar, the report said without revealing its sources.

However the Gulf Monetary Council has dismissed the rumours.

"The Monetary Council affirms that the reports by some newspapers and websites over the date of the issuing of the single Gulf currency are completely false, not based on accurate information nor reliable sources," the council said in a statement published by Kuwait News Agency.

The Monetary Council is mandated with placing regulations for the establishment of the Gulf Central Bank and completing the establishment of the Monetary Union.
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http://gulfbusiness.com/2013/12/officials-deny-common-gulf-currency-launch/

TheEnd · Jan 9, 2014

So basically Gold and Silver 'may' be used as currency until the powers bring in whatever new currency they want...Probably electronic currency???

After that Gold will be worth nothing!

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New international currency requires the Euro

JulieW Well-Known Member Silver Stacker

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New international currency requires the Euro

JulieW Well-Known Member Silver Stacker

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