New monetary system on horizon

The end of the US dollar's dominance is inevitable and the new international monetary order will be based on more than one key reserve currency, experts say.

A multi-currency system would enhance trade and investment as it would help reduce obstacles, such as transaction costs, exchange rate fluctuations, and complexity in administration, said Chakkrit Parapuntakul, deputy permanent secretary for the Finance Ministry.

Mr Chakkrit made the comments in his adresss as Guest of Honour at the sixth Asia-Europe Editors' Roundtable held by the Asia-Europe Foundation and Chatham House in Bangkok on Saturday. His views were echoed by Paola Subacchi, research director of International Economics at Chatham House.

"Given the rise and growth of Asian economies, and China in particular, a regional currency is needed to trade in Asia," she said.

The end of the dominance of the dollar in the next decades seems the inevitable and logical consequence of the changing order in the world economy, she added.

There is wide consensus that a multi-currency system is the endgame in such a process, said Ms Subacchi.

The Chinese renminbi in particular seems critical in this change.

There are bold predictions that by 2040, the Chinese currency would account for 32% of the key reserve currencies, akin to the US dollar and the euro.

Different major currencies have risen and fallen in modern history.

In the 1950s, the British pound dominated international markets. By 1955 the dollar was competing head-to-head with sterling and came to dominate the scene shortly after.

The 1980s were a period of domination for the German Deutschmark and Japanese yen. Today, both the dollar and euro are seen as major reserve currencies.

Share your thoughts

Discussion 1 : 14/10/2012 at 06:09 PM
I believe, "on the horizon," is where it's most likely to stay. The U.S. Dollar will only get stronger. China, is experiencing a slowdown in manufacturing, U.S. Companies are relocating back to the USA, the oil business is booming in the USA, and there's a projection of adding over 5, million new jobs. Since the USA, leads the world in technology, i.e., landing Curiosity Rover on the Moon, I see nothing but support for the U.S. Dollar. Furthermore, "a basket of currencies," sounds great, but there's far too many negatives involved for this to happen. Countries get into a squabble and the basket turns into a handbag.
Discussion 2 : 14/10/2012 at 03:47 PM
Perhaps with time the Euro and Renminbi will become benchmark currencies like the US Dollar. But it will take time. The EU and its Euro are still too new and untested. Likewise for China's current growth spurt, it has been too short and the current government hasn't been around for the long haul yet.
Discussion 3 : 14/10/2012 at 01:39 PM
The smartest thing the US did was to abandon the gold standard because it allows them to have as many QEs as they want so that they can “inflate” their domestic market as well as indirectly reduce, not manipulate, their currency world wide. Of course being the only super-power on earth accords certain privileges and rights. Besides, they are too big to fail and if they do, the world will go down the toilet with them; that Capitalism whether you like it or not. As a matter of course, forget about the Euros or other currencies, lets use the US dollars as the only world currency so that every one can do their QEs too.
Discussion 4 : 14/10/2012 at 02:43 AM
Never happen, money is about capitalism and there's only currency that's 100% capitalist and that's the US Dollar.....that's why it is what it is and will always be.....it might fluctuate in value, but it will always be the international standard.....worst thing the US ever did was abandon the gold standard, but even after that the dollar still retained it's place as a world standard. "New World Order" and "One World Currency" are conspiracy theories....they make excellent subjects for Hollywood movies and fiction novels.
Discussion 5 : 14/10/2012 at 12:57 AM
This idea is a stupid as the creation of the EURO.. trust me. It have no merits as a business idea and its tied to a political brain fart.
Discussion 6 : 13/10/2012 at 11:39 PM
I would suggest one world currency (OWC) as our new international monetary order which are back-up by a basket of key reserve currency and regulated by a newly created World Currency Exchange. Forget the multi-currency system as suggested. New exchange rates: USD 1.25 = 1 OWC; RMB 4.5 = 1 OWC; YEN 85 = 1 OWC; EUR 1.5 = 1 OWC Using this new world currency will be more neutral and less prompt to political pressure.
Discussion 7 : 13/10/2012 at 11:15 PM
by 2040 I would not be around to use the new currency. the new generation should save some US bank note as a keepsake, If they have too much they can use for handrolled cigarete.
Discussion 8 : 13/10/2012 at 10:14 PM
I wouldn't want to trust China, let alone chinese currency.
Discussion 9 : 13/10/2012 at 08:19 PM
It's about time I would say.....

Back to top

More From Bangkokpost.com