BRIC, SCO Discuss "Super-Sovereignty" Currency, USD Alternat

[CrackSmokeRepublican]

BRIC, SCO Discuss "Super-Sovereignty" Currency, USD Alternatives
By Scott Zhou
June 16,2009
Shanghai

China continued to consider a "super-sovereignty" currency among the countries of Shanghai Cooperation Organization (SCO), an intergovernmental mutual-security organization that met today in the Russian city of Yekaterinburg, in the Urals at the division of Asia and Europe. Members include China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan, with India as one of its four observers.

Right after the SCO meeting, the BRIC country (Brazil, Russia, India and China) leaders met formally for the first time. It is not merely coincident that three of them have expressed a desire to adjust their foreign exchange reserve portfolios by reducing the share or volume of US dollar assets.

China has just halted the increase its holding of US Treasury debt. By the end of April, China held $763.5 billion of it, a fall of $4.4 billion, month on month, the first time China has reduced its Treasury holdings. Since May, 2008, China has increased its holding by $260 billion.

Inside China, USD is a hate-more-than-love story. Analysts have long argued that China should be very cautious on buying US government bonds since dollar is bound to weaken. Others hold that US treasury debts are still the best and first choice for China's near $2 trillion foreign exchange reserve.

In March, Madam Hu Xiaolian, the chief of China's State Administration of Foreign Exchange and a deputy governor of the People's Bank of China, China's central bank, said that investing in US national debt is an essential part of China's reserve management. But while continuing to buy US national debt, China is concerned about the risk of the fluctuation in value of its assets.

China has announced that it would buy up to $50 billion in bonds issued by the International Monetary Fund (IMF). Meanwhile, Russia and Brazil have said they are planning to buy up to $10 billion in IMF bonds, which would mean selling Treasury bonds. India has expressed the same interest. In April, China, Russia, and Brazil all reduced their holdings of US treasury debt.

China now believes that a long-term dollar decline is inevitable, and the risk to the value of its $2 trillion foreign exchange reserve has become realistic, if not imminent.

China has been a huge beneficiary of the order of the world economy and a monetary system with the US dollar as the reserve currency. China's economy has been anchored by a stable dollar exchange pegged by China's currency, RMB.

But the financial crisis has given China a wake up call that the present monetary system is not sustainable, and neither is China's foreign exchange regime and mode of economic growth, which has been largely based on relentless exporting.

What, then, is the role RMB can play in the future? Russia has been urging China for years to settle their bi-lateral trade in their respective currencies. Brazil intends to trade with China by RMB and the real. Recently Russia suggested making RMB convertible to become an international reserve currency.

China can not challenge US directly. The BRIC summit is a convenient platform for China and the other BRIC powers, set to become the 4 of the 6 largest economic entities by 2050, to put a bit of pressure on the US. Held before the first China-US Strategic and Economic Dialogue in late July in Washington DC, the BRIC summit may give China some leverage in dealing with the US.

Russia is ready to use its exchange reserve to buy securities issued by BRIC countries. In return, Russia hopes the others will be willing to buy financial instruments issued by Russia. The leaders discussed increasing of the share of settlement currencies for trade among them. They also discussed adjusting their reserve assets portfolio in a coordinated way.

At the SCO meeting held just before the BRIC summit and attended by China, Russia and India, China proposed to research the feasibility of using a super-sovereignty currency among SCO member countries.

Kazakhstan president Nursultan Nazarbayev proposed that trade among SCO countries be settled by currencies of member countries. He also suggested that a super-sovereignty currency used inside the SCO eventually become a SCO reserve currency. Russian President Dmitry Medvedev also supported the idea.

http://www.chinastakes.com/2009/6/BRIC- ... tives.html

[rmstock]

Thanks for pointing to this. This is a important development.
Here's Larouche's stance on this :

British Push BRIC to Dump the Dollar
http://www.larouchepac.com/node/10711

June 19, 2009 (LPAC)—John Browne, a former British MP who now works for the Connecticut security firm Euro Pacific Capital, published a piece in the leading British intelligence outlet in Asia, Asia Sentinel, called "BRIC threat to US Dollar Reserve Currency." Browne is best known as a frequent guest on CNBC's neocon Kudlow & Co. and as the former editor of the right-wing NewsMax Media's Financial Intelligence Report and Moneynews.com.

Browne incredibly describes the BRIC nations as "united by healthy economic growth[!] and their concern about unprecedented levels of US debt and the safety of their respective reserves." He gloats: "There can be no doubt that these emerging economic powers are trying to chart an economic path that will free them from dependence on the American financial system. And there is ample evidence that the first coordinated steps are being taken."

Browne claims that the BRIC nations—Brazil, Russia, India and China—are "flying kites," first China and now all of them, putting out calls to dump the dollar, but always tactfully retreating. This, says Browne, "served to erode confidence in the dollar's role," projecting this British intent upon the BRIC.

Browne concludes by stating the British policy intention, while ascribing it to the BRIC: "The US dollar is clearly coasting on its legacy. The Obama Administration's actions have eroded confidence to the point that the rapidly developing BRIC membership has risked its own substantial stake in dollar investments to publicly call for an alternative. These comments are the tip of the iceberg. Behind the scenes, we can bet that creditor states are preparing for flight. Though the dollar's slide has been stayed by pronouncements of confidence from Russia, Japan, China, and others, there will come a time when the pain is too great and the outcome too certain. Private investors who haven't already left the collapsing dollar ballroom may be crushed when the big players stampede."

Browne is expressing policy intent, not factual developments. As LPAC has reported, the BRIC did not adopt an anti-dollar proposal at their Summit, while both China and Brazil have stated that there is no replacement for the dollar at this time. India's Prime Minister Manmohan Singh, on his return to India, told reporters that the idea of an alternative to the dollar was "aired, but no concrete conclusion emerged," but that "further examination by our finance ministers and governors of the central banks."

It is the responsibility of the LaRouche movement internationally to expose and crush this British scheme to destroy the dollar, the US and the world.
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June 19, 2009 (LPAC)—John Browne, a former British MP who now works for the Connecticut security firm Euro Pacific Capital, published a piece

Ehh Euro Pacific Capital ..... Thats the business enterprise of Peter Schiff, who recently
was interviewed by Jon Stewart of the The Daily Show and laughed his balls off.