China, Russia: No Dollars Allowed
The U.S. dollar’s status as the world’s reserve currency, the standard currency used to pay off international debt and influence exchange rates, could be coming to an end. China and Russia announced Nov. 24 that they would cease using the dollar as their reserve currency and would instead use the ruble or yuan to settle bilateral debt.
In addition, BusinessWeek reported that the two countries “have called for the dollar’s role in the financial system to be diluted. Volatility in major currencies is putting the global recovery at risk, Zhang Ping, the head of China’s National Development and Reform Commission, has said.”
Portfolio.com reported that the move by Russia and China could be a response to the U.S. debt, which continues to grow, stating, “Some fear that could be the result of the U.S.’s massive deficit, now 8.9 percent of GDP. And there is fear that the Fed’s latest plan to digitally ‘print’ $600 billion in money to stimulate the American economy will only accelerate that trend.”
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