Reuters “Summit Notebook” – a blog of anecdotes and reporting from summits around the world – featured some interesting comments from Hiroshi Watanabe, president of the Japan Bank for International Cooperation, on the increasing speculation around the future of the dollar as the global reserve currency.
Mr Watanabe analogised thus at the Reuters Japan Investment Summit, which ended on Wednesday:
“Esperanto is a very good language, but no community uses it in its daily life”
“That’s the same situation that applies to the currency… I don’t see any other currency that can take the position to replace the key U.S. dollar.”
As for talk that either the euro, SDRs or “even the not-fully convertible yuan” as future replacements for the dollar, Reuters said Mr Watanabe did not believe this would happen anytime soon, “although he notes a loss of dollar sheen”.
Dollar sheen. Superb.
“The dollar should remain the key currency for the time being, but we have to admit that the dollar is over its peak,” he said.
“SDRs can be used for book-keeping the liability of an asset by the IMF of World Bank… but in the case of settlement, it is not so easy to use that kind of hypothetical unit.”
Related links:
Two very different scenarios for SDRs – FT Alphaville
A paper-gold reserve system? – FT Alphaville
Is a global super currency on the agenda? – FT Alphaville
Global currency, it COULD happen – FT Alphaville