By NBF News
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By Omoh Gabriel, Business Editor

*Gulf Arab countries along with China, Russia, Japan and France plan to end dollar dealings for oil

*China which holds more US dollars than anyone else is already getting out of the US

Sanusi Lamido Sanusi
*IMF has recommended that the world adopt a global currency called the 'Bancor'

Recently a group of the world's most powerful countries, including China, Japan, Russia, and France, got together for a meeting without the United States of America. The meeting was on how a new reserve currency could be developed among trading nations out side the dollar. The report was written by Veteran Middle East reporter Robert Fisk for Britain's Independent newspaper.

Gulf Arabs countries are at the moment planning along with China, Russia, Japan and France - to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese Yen, Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

These plans if they come true will definitely change the face of international financial transactions. The question is what are the plans of the Central Bank of Nigeria and the federal government to diversify the nation's foreign reserves portfolio from the dollar? What about Nigerians who hold their assets in dollar and dollar based investment ? If the government and individuals do northing about this, Nigerians will one day found out that their dollar foreign reserves and investments are worth less than they think.

The value of the dollar is declining daily as a result of fears of a potential debt crisis in the US from the federal government down through individual States such as California, Wisconsin and the rest. These are of a size that makes the Euro-zone crises look lame.

Other factors are; a US budget deficit that is not being addressed properly; The U.S. Treasuries are over half owned by foreigners essentially subsidising the U.S. low interest rates; a loss of global power, as China's growth, not only will eclipse that of the U.S. but will see manufacturing move to China from the U.S. a process well underway already; the future prospect that the dollar will lose its role as the sole global reserve currency to the Yuan and perhaps a basket of other hard currencies of which it will remain only a lesser part.

In reaction to all of these China which holds more U.S. dollars than anyone else is already getting out of the U.S. dollar as fast as they can without crashing their own economy. China is unloading as many dollars as they can, as quickly as possible. A recent report quoted Cheng Siwei, a former vice-chairman of the Standing Committee as saying that China is going to stop putting so much money into U.S. dollars, and will instead look to the Japanese Yen and the Euro.

Many Nigerians have forgotten that Britain was a global superpower for 150 years. Its currency played the role the dollar is now until the British government started intentionally devaluing the pounds, and things went straight down hill. What happened to the British currency is now happening to the U.S. dollar. For years the U.S. dollar has been accepted almost universally around the globe. But recent reports indicate that HSBC, one of the largest banks in Mexico, no longer allows customers to deposit U.S. dollars into their banks. They've done this on the heels of money-laundering allegations, but it is suspect they also simply don't want to be stuck with tons of U.S. dollars, as the currency continues to decline.

This move would have been unfathomable ten years ago that a big bank in Mexico would no longer accept U.S. dollars for deposit. But today it is the harsh reality. Apparently Mexico is not the only place this is occurring. Reuters reports that the same thing happened in 2008 in one of Europe's most popular tourist spots currency exchange outlets in Amsterdam, turning away customers who want to exchange their U.S. dollars for Euros.

In India, the country's tourism minister said that U.S. dollars will no longer be accepted at the country's heritage tourist sites, like the Taj Mahal. And the U.S. dollar is no longer good anywhere in Cuba. The New York Times reports that many shops in China no longer accept dollar-based credit cards issued by foreign banks and foreigners cannot convert American dollars into renminbi beyond a given quota.' Iran, of course, has already moved all of its reserves out of U.S. dollars, and Kuwait de-pegged it's currency from the dollar a few years ago:

Bloomberg News recently reported that China and Russia plan to start trading in each other's currencies to diminish the dollar's role in global trade. 'Given the risk to the dollar and U.S. assets from their fiscal position, they want to reduce their dependence on the dollar as an invoicing currency,' said Bhanu Baweja, of UBS bank. It's even happening in the USA Most Americans don't know that some states in the Mid-West are already using 'alternative currencies'

The Chicago mercantile exchange the world's largest futures and commodities exchange board, now accepts gold to settle futures contracts. Until recently, the exchange typically accepted only U.S. treasuries and bonds as payment. This would have all been completely unthinkable 10 years ago, but today it's a reality. And this trend is going to keep moving incredibly fast.

Bill Gross, who probably knows as much about currencies and debt as anyone in the world, runs the world's biggest bond fund. He was quoted by Bloomberg as saying 'We've told all of our clients that if you only had one idea, one investment, it would be to buy an investment in a non-dollar currency.

As Jim Rogers says: 'History teaches us that such imprudent monetary and fiscal behavior has always led to economic disaster.' This is why World Bank president, Robert B. Zoellick, in a speech at the School for Advanced International Studies at Johns Hopkins University, recently said: 'The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency. Looking forward, there will increasingly be other options to the dollar.'

The International Monetary Fund (IMF) recently published a paper calling for a new global world currency.

In a paper entitled 'Reserve Accumulation and International Monetary Stability,' written by the Strategy, Policy and Review Department of the IMF, it recommended that the world adopt a global currency called the 'Bancor' with a global central bank to administer the currency. The report is dated April 13, 2010.

As Brazilian economist and strategist Ricardo C. Amaral wrote recently: 'The US dollar served its purpose since the end of World War II and became the major foreign exchange reserve currency but the days of the US dollar playing that special role has reached the end of the line Mr. Amaral added that we will soon see'the major collapse of the US dollar creating the biggest international monetary crisis the world has ever seen.'

This is why gold and silver prices are soaring: From reports across the glob it's not a matter of 'if' the U.S. dollar will lose its status as the world's reserve currency it's simply a matter of 'when.'

While all these are going on around the globe the federal government and Nigerians are stocking their assets in dollar and the big question is how prepared is Nigeria if the dollar suddenly ceases to be the reserve currency.