US Backing for World Currency Stuns Markets

[peaceandlove]

US Backing for World Currency Stuns Markets

US Treasury Secretary Tim Geithner shocked global markets by revealing that Washington is "quite open" to Chinese proposals for the gradual development of a global reserve currency run by the International Monetary Fund.

By Ambrose Evans-Pritchard
Last Updated: 8:18AM GMT 26 Mar 2009

The dollar plunged instantly against the euro, yen, and sterling as the comments flashed across trading screens. David Bloom, currency chief at HSBC, said the apparent policy shift amounts to an earthquake in geo-finance.

"The mere fact that the US Treasury Secretary is even entertaining thoughts that the dollar may cease being the anchor of the global monetary system has caused consternation," he said.

Related Articles at link below:
Geithner seeks power over hedge funds and derivatives
Tim Geithner and Barack Obama 'at odds' over economy
Positive noises cheer Wall Street
A world currency moves nearer after Geithner's slip
Geithner about-turn on dollar shocks currency markets
Gold price spikes as dollar falls
Mr Geithner later qualified his remarks, insisting that the dollar would remain the "world's dominant reserve currency ... for a long period of time" but the seeds of doubt have been sown.

Excerpt:

The markets appear baffled by the confused statements emanating from Washington. President Barack Obama told a new conference hours earlier that there was no threat to the reserve status of the dollar.

"I don't believe that there is a need for a global currency. The reason the dollar is strong right now is because investors consider the United States the strongest economy in the world with the most stable political system in the world," he said.

Article continues and Video: http://www.telegraph.co.uk/finance/e...s-markets.html