Having the US Dollar as the only international currency for trade only helps the US to export its inflation to all countries that have US Dollar reserves. With the Federal Reserve the sole arbitrator in printing US Dollars, the US actually gets the rest of the world to pay for its largess. Mismanagement of the US economy also causes bubbles, which sends ripples all over the world. Moreover, every time there is a transaction between two countries, the US gets to claim jurisdiction over that transaction, just because for a fraction of a second, the transaction is converted into US Dollars. Moreover, the US charges transaction fee on that transaction, even if the US is not party to that transaction. These are the various ways money is leaked out from the rest of the world to the US.
The world does not need to deal with the aftereffects of the mismanagement of the US Dollar or pay a transaction fee every time there is a transaction not involving the US. Under such circumstances, an alternative currency for international trade is welcome. A single currency monopoly is never a good idea.
Few things to note:
- The share of US Dollars in international trade is dwindling.
- May European countries have joined the Chinese banks.
- PRC and Russia are dumping US Treasury bonds.
- IMF is losing its grip on the world economy.
The trend is out there for everyone to see. The US Dollar is on its way out.
Many countries will now hedge not only on the US Dollar, but also the RMB.