Casualness, complacency and the curbing of the Dollar
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As the globe "weans itself off the US dollar," the world's reserve currency is in question and the U.S. is being far too complacent about the demise. The situation is a striking illustration of new world order.
The US dollar being abandoned for Euros by drug smugglers who are opting for higher denomination notes is yet another example of the increasing curtailment of the currency and the growing preference to substitute it for another. According to Europol, US$100 notes are being replaced by 500 euros notes as they take up less space to transport when laundering billions in illegal profits around the world.
The new penchant for dealing in Euros was made clear by the findings on a British Airways plane heading for London from the United States, where police found 11 million pounds worth of profits from illegal substances in 500 euro notes. The incident was part of a larger campaign involving police throughout Europe tracking the movements of laundered euros which are often traced back to large drug cartels.
Criminals "dumping the dollar" in favor of another currency is just one of many examples of the world weaning itself off the dollar. Last month Niall Ferguson, Harvard Professor and author of The Ascent of Money, spoke of China's ability to wean themselves away from the dollar and that Washington DC are too complacent about their weakening currency. "China's current strategy is to diversify out of dollars and into commodities. Furthermore, China's recent pact with Brazil to conduct trade in their local currencies is a "sign of the times," said Ferguson.
The author continued about the nonchalant attitude officials in America have about their diminishing dollar: "People in Washington rather assume because the US consumer was so dominant they're really isn't a substitute."
The White House's complacency towards the matter could not be more ill-timed, as countries choosing to conduct business in local currencies and drug cartels opting to smuggle euros instead of dollars are not the only cases of the dollar being threatened as the supreme currency of global finance.
In October last year, it was reported by a British newspaper that the Gulf Arab states were secretly collaborating with China, Japan, Russia and France about substituting the US dollar with other currencies in the trading of oil. Although the report stated that it is being proposed that over the next nine years crude oil is to be traded in other currencies including the Chinese Yuan, the Japanese yen, the euro, as well as gold and an unidentified new currency intended for nations in the Gulf Co-operation Council, top officials denied there had been such deliberations.
For the best part of this decade the dollar has been struggling to maintain its power and preserve its symbol as America's muscle. Several years ago, Iran began to expand its trade of oil in different currencies to the dollar, and according to Central Bank Goverbor Mahmoud Bahmani, in doing so has made a huge profit. Iranian President Mahmoud Ahmadinejad has referred to the dollar as a "worthless piece of paper."
Many Chinese officials believe that Barack Obama is too preoccupied with salvaging his country's own economy to focus on the implications a conversion of currency in the oil industry would inevitably have on the global economy. Reiterating the concern towards the inopportune timing of Washington DC's "complacency," one Chinese banker said: "These plans [changing oil trade currency] will change the face of international financial transactions. America and Britain must be very worried. You will know how worried by the thunder of denials this news will generate."
America is slowly losing its economic power, and although the nation has been criticized for being somewhat blasé about the situation, the dollar's decline has been accepted as being implicitly linked to the current global financial crisis and is, as Niall Ferguson put it, "a sign of the times."
Robert Zoellick, president of the World Bank, acknowledged the world's changing economic status. He said: "One of the legacies of this crisis may be recognition of changed economic power relations."
Whilst the Iranian President's sentiments towards the dollar may be a little hostile and far-fetched, the exclusion and suggested exclusion of the dollar by such diverse countries, industries and organizations, shows the demise of a currency, which for the best part of a century reigned in global supremacy, is a prominent demonstration of the world's changing financial face.
?The author is a columnist with China.org.cn. For more information please visit:
