Tuesday, September 3, 2013
China Calls for New Global Currency
http://abcnews.go.com/Business/story?id=7168919&page=1 Due 6 Sep 2013. What are the United States and the European nations against the new initiative for revamping the world economy?? What is China proposing for the new system? Why is China proposing this new system?
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1.) The United States and the European Union are both against China's proposal because they have been using the same present world currency, the dollar, for many decades now, and that dollar itself is the most widely-used currency.
ReplyDeleteMany governments also hold a large portion of their reserves in dollars. EU Comissioner, Joaquin Almunia said: "Everybody agrees also that the present world reserve currency, the dollar, is there and will continue to be there for a long period of time,". This shows that the dollar will not be replaced as the global currency.
2.) Beijing's central bank governor, Zhou Xiaochuan, proposed a new idea for a global currency recommending to create a currency made up of a basket of global currencies and controlled by the International Monetary Fund. He also said that it would help achieve the objective of safeguarding global economic and financial stability.
3.) China would like to propose this new system because they want to keep the value of the global currency steady. China also feels that if the United States' economy fails, that the value of the dollar will decrease, thus wreaking havoc on other nations around the world, including themselves.
Recently, China has been proposing a plan to expand the global currency to different types instead of just the dollar. The creator of this proposal, Zhou Xiaochuan, beleives that by doing so, the world will be able to have financial stability. China is proposing this new system because they want to keep the economy steady, globally. China also believes that the economic crisis in the US will cause the value of the dollar to inflate, making it worth less. The United States and the European nations are against this idea because they believe that the dollar is good enough to be used as a global currency. Michael Pettis, a finance professor at Peking University's Guanghua School of Management, states that "Managing such a currency would require balancing the contradictory needs of countries with high and low growth or with trade surpluses or deficits"
ReplyDelete-Kevin Thwe
The United States and European Union are against China's suggestion for a new currency for a number of reasons. The dollar has been the primary world currency for many years and is the most widely used currency. Countries all over the world have dollars in their reserves. Managing a new international currency would pose a very challenging balancing act between economically different nations. Also, oil prices and other commodities are priced using dollars. Zhou Xiaochuan, the governor of Beijing's Central Bank, has suggested a new currency and monetary system. He has suggested that a new currency be made from a pool of all the major currencies and that the new currency is regulated by the International Monetary Fund. China has proposed this new system in hopes that it will create a steadiness in the value of currency. China wants to give a greater voice to countries with a developing economy. Although the idea of creating a global currency has been mentioned before, there are such large obstacles in the way that it is unlikely there will be a reform any time soon.
ReplyDeleteIs this what is referred to as "economic warfare"?
ReplyDeleteThe dollar has been the primary currency that the world has been using for a number of years. This is the main reason why China has been planning on changing the world currency so that the global currency can contain a variety of different types. One of the main reasons for this proposal is that china believes that the value of the dollar with inflate, making it worth less around the world. Zhou Xiaochuan was the original creator of this plan, and by accomplishing this plan he believes that the world will become financially stable. Many governments though also hold a large portion of their reserves in dollars as well. So by changing the currency would be become difficult when it comes to balancing the different currencies equally. Zhou’s plan is basically set up by having all of the major currencies in a basket created a new currency controlled by the International Monetary Fund. China as well wants to do this because they want to give a voice to the developing countries in the world. But based on the fact that a lot of the worlds government's and reserves are based on the U.S currency, it is highly unlikely that there will be a reform anytime soon.
ReplyDelete-Nicholas DiGirolomo
1.) The United States and European Union are against China's idea of revamping the world economy because the dollar has been the most widely used currency for years and many governments around the world have large portions of their reserves in dollars.
ReplyDelete2.) China is proposing that we get a new common currency for trade. China is also asking that we give more proper representation and a bigger voice to developing countries.
3.) China is proposing this new system because it wants to keep the global economy steady and is afraid that the present economic conditions in the U.S. will lower the value of the dollar, which will then affect countries around the world including China.
1.) Both the U.S. and the EU expressed disagreement with Gov. Zhou Xiaochuan's proposal to replace the dollar as the main global currency. In the U.S., Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner voiced rejection of the idea. EU Commissioner Joaquin Almunia spoke about his belief in the longevity of the dollar and its place in the global economy. The Dollar has been the international reserve's currency for a long time, and changing this would not only be inconvenient, but would also harm the many countries that have their reserves in dollars, the many business people around the world who work with dollars, and the crude oil and other markets that are measured in dollars.
ReplyDelete2.) Gov. Zhou Xiaochuan's proposal was written as an essay, and published in both Chinese and English- implying that it was meant for a foreign audience. In this essay, "...he recommended creating a currency made up of a basket of global currencies and controlled by the International Monetary Fund..."
3.)China's proposal is based on various factors. For one, constant economic troubles in America make it risky that something might happen to deter the dollar's stability- doubts which the Chinese government has voiced quite forcibly recently. The idea that mishaps in other economies, through globalization, might affect the Chinese economy is certainly one of the reasons for this proposal. Something of the sort, although not very likely to occur, would stabilize China's "undervalued" currency.
China has proposed that there should be a new global currency that would replace the most dominant international currencies. Without specifically pinpointing the U.S. dollar as the target, it is internationally the strongest currency worldwide. Despite economic changes in the U.S. which has affected the U.S. dollar elsewhere, the dollar has continued to hold its viability in the international market. Even governments of countries with their own currency, hold their reserves in the U.S. dollar. China is proposing a change in international currency because of their concerns with its excessive holdings in U.S. government bonds. China proposes that there should be a reserve currency which is comprised of several global economies which would be administered by the International Monetary Fund (IMF) based on the “shares in the body held by its 185 member nations.” They claim that they want to keep the global economy safe and make sure that the international community is financially stable.
ReplyDeleteThe US dollar has been the most dominant international reserve currency since the end of WWII. The US and the EU officials say that the dollar continues to be the safest and most secure of all international reserve currency and have no interest in changing the status quo. To do so would ill- effect price stability by no longer attracting foreign visitors as well as governmental central banks.
Leah Seiler
Period 1
1)From what I've read china is for the revamping of currency, while the united states as well as some countries are against it.For decades the dollar has been the worlds most use currency, many governments hold a large portion of their reserves in dollars.while china is uneasy about relying on the dollar for the bulk of its trade.
ReplyDelete2) He recommended creating a currency made up of a basket of global currencies and controlled by the International Monetary Fund and said it would help "to achieve the objective of safeguarding global economic and financial stability." The essay was published in both English and Chinese making it clear it was meant for foreign audience.
3)china is proposing this new system because For decades, the dollar has been the world's most widely used currency;the financial crisis has highlighted how America's economic problems — and by extension the dollar — can wreak havoc on nations around the world. China is in a bind. To keep the value of its currency steady — some say undervalued.
Barbara Val
period 1
1. Both the United States and the European Union are against the initiative for revamping the world economy due to the fact that the management of such a global currency would be near impossible. The shear multitude of different economic system makes for a unmanageable scenario. Managing such a currency would require balancing the contradictory needs of countries with high and low growth or with trade surpluses or deficits. Opposition also exists from the US because of the vast difficulties that would arise from completely overhauling the US dollar.
ReplyDelete2.China is proposing multiple ideas for the system. Mainly, china plans, as it always has, to reform the IMF, World Bank and global financial system to give greater voice to China and other developing economies. Zhou suggested creating a "reserve currency" based on shares in the body held by its 185 member nations, known as special drawing rights, or SDRs. He also expects the currency to be utilized by the vast majority of countries connected through the global economy, by adding that the currency should be used for trade, pricing commodities and accounting, not just government finance.
3. The backbone to China's reasoning in its proposal of a global economic system is because China is in a bind- the Chinese government has to recycle its huge trade surpluses,and the most liquid option for investing them is U.S. government debt. This puts them in an awkward predicament, and the proposal comes to relieve China from the daunting task of keeping the value of its currency steady.
(1) China is proposing indirectly to revive the world economy by replacing the dominant American dollar with another currency that contains a "basket of global currencies." For decades the American dollar has been the standard currency for the world economy, and many countries even have large portions of their reserves stored in the American dollar which the main reason why the United States and the European Union are in disagreement with the proposal. The European Union's top economic official stated that the dollar's role as the global currency is stable and secure, despite China's proposal.
ReplyDelete(2) For the new system, China is proposing the American dollar is to be replaced with a basket of other global currencies. This was indirectly proposed however because Gov. Zhou Xiaochuan unusually printed his essay in both Chinese and English. Gov. Zhou Xiaochuan also proposed that the IMF should create a "reserve currency" to be used for other purposes than just government finance such as trade and accounting. He also called for changing how special drawing rights are valued.
(3) China is proposing this new system mainly because there is an insecure feeling about its vast holdings of bonds in the US government. This concern has been discussed in the past, in which China has always been unsure about relying on the dollar for the bulk of its trade and storing reserves. The Chinese government is concerned with the stability of its currency value and therefore wants to recycle its huge surpluses in trade, most of which are in the U.S. government debt.
The United States and European Union are against this proposal because the dollar is already established as the world's currency and would be a challenged to their economies if there was change. China proposed that the world use IMF bonds to conduct trade. China has been uneasy about using the dollar for so much of its trade and argues that the dollar is too debt ridden for use.
ReplyDeleteThe United States and European Nations aren't too satisfied by China's decision in calling for a global currency to replace the dominant dollar because the dollar has been the world's most widely used currency for such a long time. Everything we do today has to do with the dollar in some way,shape, or form. Being that many governments hold a large portion of their cache in dollars and many different commodities are priced in dollars, this “revamp” can cause lots of confusion and change that may take a while to enforce. China is proposing creating a currency with all global currencies within. They're proposing this new system to createn financial stability globally.
ReplyDelete~Kim Rose
Period I.
The United States is not to thrilled with Chinas proposal for a world wide common currency. China suggested "a basket of global currencies" to replace trading with the US dollar. It has always been that the dollar was the main currency for trade. China is starring to feel this way because of the amount of bonds held in the US. They don't trust the dollar in the bulk of trade. They also don't trust stability of the value of the dollar.
ReplyDelete-Jason Ramadan
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ReplyDeleteThe United States and the European Union are against the new proposal for a "global currency" for a number of reasons."For decades, the dollar has been the world's most widely used currency". The dollar is an established form of currency, changing it now would be a very complicated and complex plan. Gov. Zhou Xiaochuan recommended creating a currency made up of a basket of global currencies and controlled by the International Monetary Fund and said it would help to achieve the objective of safeguarding global economic and financial stability. China has long been uneasy about relying on the dollar for the bulk of its trade and to store foreign reserves. In order to keep the value of Chinese currency steady they have to recycle its huge trade surpluses.
ReplyDeleteThe United States and European nations are against the new initiative for revamping the world economy simply because the dollar has been used for many decades and is in fact the most widely used currency, meaning that a change in the currency would have many drastic effects on global trade. China is proposing a global currency made up of a larger amount of global currencies, to be controlled by the IMF. China is proposing this system because they feel that the value of the dollar is unreliable and are worried that if the United State's economy falls that it will wreak havoc upon the world of trade.
ReplyDeleteThe United States and European Unions do not want to change the global currency because it has been the global currency for years now and would cause confusion if it were to be changed, as well as for the fact that many governments also use the dollar for trade and for finance, and changing the global currency would limit these governments. China is proposing to create a currency made up of a basket of global currencies that is controlled by the International Monetary Fund. China is proposing this new system "to achieve the objective of safeguarding global economic and financial stability."
ReplyDelete- Anita Pizzirani (Pizza) Period: 1
United States and the European nations are against the fact that China, the third-largest economy and the largest foreign reserves holder, is trying to let the Chinese currency, Yuan, to be the new global currency. The reason that the Chinese are trying to propose such an idea is that they are feeling unsecured that the U.S. economy might collapse soon.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteThe United States and Europe are currently the countries that are in control of the global economy, and the United States' currency is used as the global standard. This is why countries like the United States and the States' close allies want the old system to stay in place, and oppose the old initiative.
ReplyDeleteChina wants a global currency that would replace the U.S. dollar as the standard in the global economy and therefore make the global market more fluid, allowing developing countries to increase the value of their own currency relative to a global standard instead of dealing with the U.S. dollar.
China, on the other hand, is in favor of an overhaul, and proposed it in the first place because they are a rising (or risen) power that wants to use a new standard of currency that would allow them to be on top of the global economy. The current system defines everything in terms of the United States. China wants a fluid global economy where any nation has a chance of establishing themselves as the dominant nation among the global economy.
With China new proposal, the United states and the EU are deeply aganist it, because the dollar has been the primary currency for many years but China think the dollar's value will go down, which causes inflation
ReplyDeleteChina wants to create a currency made up of a basket of global currencies and controlled by the international monetary fund
China has proposed this new system value of currency because it wants to keep the global economy steady
China has called for a considerably drastic reform in our world economy: to replace the dominant dollar and for the U.S. and Europe to relinquish their control of appointing the heads of the World Bank and International Monetary Fund. The U.S. and Europe have both vetoed these proposals. One of the many reasons for their immediate dismissal of China's plans included the fact that the dollar has been the world's most widely used currency for decades. They also made the point that the dollar has been used in affairs of the utmost importance, such as business deals; and many governments' reserves, crude oil, and many commodities are priced in dollars. China argues, however, that their plan should be given proper consideration, especially in regards to getting the developing countries more involved with the world economy system. As it stands now, the vote is against China and its desired reforms.
ReplyDeleteThe U.S. dollar’s current status as the standard currency allows America and Europe to have considerable control over the global economy. Naturally, they are against China’s attempts at creating a new global reserve currency and seriously altering the system. Not only do many nations keep a huge part of their reserves in dollars, a lot of markets deal business and sell their commodities in dollars too. Changing the international system would also cause a lot of inconvenience. So, the U.S. and Europe have vetoed China’s proposal and feel that the standard switch, realistically, will not happen. China’s plan would be to create a currency out of a “basket” of global currencies and have the International Monetary Fund control it to safeguard global, economic, and financial stability. China mainly advocates a switch out of fear of relying on the dollar for its trade and reserves. China also wants to avoid dealing with the vulnerabilities of the dollar in the current economic crisis. It wants to protect developing countries from these vulnerabilities and help them raise their currency value by using a new global standard. China also wants to make the currency fairer by having it reflect the major economies. Since it is the third largest, that would mean China gets more power and voice in the global economy.
ReplyDeleteThe United States and the European nations are against China’s proposal revamp the world economy. The dollar has been used for many years and it would be strange to change now because of how used to the US dollar the world has become. "For decades, the dollar has been the world's most widely used currency." Also, both the US and the European nations would lose buying power and the value of their own money and thus control of world trade if they lost the US dollar as the global standard. China wants a change in the global currency. China proposed to create a currency made up of multiple global currencies. They basically want to even out the nations’ abilities to control the global economy and possibly to devalue the US dollar thus making us owe more money to China as that is China’s main investment (US debt) according to the article. –Ian Hunt
ReplyDelete