As impressive as the sums involve sound, it will in no shape or form replace the u.s. Dollar as the reserve currency. As a supporting reserve for their trading currencies it will be fine but there is still no currency in the world that can absorb the type of inflows that the u.s. Dollar can. It can absorb trillions of dollars......this is why when things turn sour the u.s. Dollar will rise, just as it is basing now for the biggest run ever as world economies start to adjust to the realities of too much debt and spending. Gold backed currencies will be crippled as gold will still trade in u.s. Dollar and will in turn run with the dollar to an all time high. Not just yet of course....still the low to come.
Is there anyway the BRICS could consolidate debt in a BRIC style bond? This way trading partners could park their excess trading currency reserves in something not denominated is US dollars. I take it this would require a common currency between the BRICS or there could be some kind of exchange rate based on the individual strengths of their currencies to the bonds?
Don't give them any ideas. We already have one half baked currency (euro) that is doomed to fail due to its inherent weakness.
More than irony, I would have thought. If their intention is to defend against the policies of the US, then their efforts are wasted if the bank is based on the $US. Shirley, they would have noticed.
They could create a BRICS currency basket just like the IMF's Special Drawing Rights. One BRICSs Basket Unit would essentially be a package of currencies from all the countries involved, probably in rough proportion to their economic weight in the group. That means each individual currency would have a rate of exchange against the group currency. So yes, they could then create a BRICS bond denominated in BRICSs Basket Units.
Not if Chinese policy makers have any say about it; the People's Bank of China is acutely aware of the consequences of the Triffin Dilemma. The PBOC is acutely aware because they are the current counter-party who was (kind of forced into) purchasing the mountain of debt obligations with the issuer of the current global reserve currency (the US Dollar).
100 billion.....Is that ALL they can come up with lol!......Just a drop in the ocean compared to the U.S's debt! US debt is 18 TRIIIIIIIIIIILIIIIION dollars!!!!!!!!!!! Mind you I hope MSM a sending this message out as a warning of TOO MUCH DEBT in the present world!
It's not so much the medium-term ability of these new structures to supplant the dollar as world-reserve, but more another notch in the global trend of other countries taking baby-steps to do so. The building blocks for sea-changes like world-reserve switch take place over decades before the switch is (often suddenly) made.
