China is calling for a new global currency to replace the dominant dollar now!
“One is wealthy not because of his much RMB,but for dollars in his bag.” a slogan Chinese used to preach in decades after the opening of China. Dollar is famous for the value it owed. For decades, the dollar has been the world’s most widely used currency. Many governments hold a large portion of their reserves in dollars. Crude oil and many commodities are priced in dollars. Business deals around the world are done in dollars.People could get anything they wanted by it.
Now, things have changed! The financial crisis has highlighted how America’s economic problems — and by extension the dollar — can wreak havoc on nations around the world. China has long been uneasy about relying on the dollar for the bulk of its trade and to store foreign reserves. Premier Wen Jiabao publicly appealed to Washington this month to avoid any response to the crisis that might weaken the dollar and the value of Beijing’s estimated $1 trillion in Treasuries and other U.S. government debt.
Subsequently,actions have been taken! Holds vastly U.S. government bonds and then adds pressure to overhaul a global financial system dominated by the dollar and Western governments. That shows a growing assertiveness on revamping the world economy ahead of next week’s London summit on the financial crisis.To better insulate countries from the ills of one country or one currency, Zhou said the IMF should create a “reserve currency” based on shares in the body held by its 185 member nations, known as special drawing rights, or SDRs.
China’s proposal would greatly expand the use of an obscure type of currency created by the International Monetary Fund in 1969 known as “special drawing rights,” or SDRs. The SDR was originally pegged to the dollar but is now based on the value of four different currencies. But under China’s proposal, the SDRs would have a much broader role and would be used for international trade, commodities pricing, and other functions.
For the idea to work, the IMF would have to decide how much more of the SDRs would be created, a process that could be easily politicized. In addition, using the SDRs for international trade and commodities pricing would require that private companies accept the new currency. That is “a huge hurdle to overcome”.
It is brushed down by several leaders planning to attend G20 conference. President Barack Obama described China’s proposal as unnecessary during a prime-time news conference.The idea of a creating a new global reserve currency isn’t new. But analysts say the proposal isn’t likely to gain much traction because it faces major obstacles. It would require acceptance from nations that have long used the dollar and hold huge stockpiles of the U.S. currency.
More than that,the creation of a new supra-national global reserve currency to supplant the U.S. dollar would likely lead to a complete collapse of the greenback, of which trillions are held in in foreign exchange reserves by foreign countries such as China and Japan.
Tag: financial
RMB vs Dollar
Bank of America Fully Implementing Treasury’s Making Home Affordable Plan
the nation’s largest mortgage servicer, announced that it will participate in the Making Home Affordable Plan based on program guidelines released today by the U.S. Department of the Treasury, extending new foreclosure prevention and refinancing options to eligible customers nationwide. While the company becomes operationally ready, Bank of America will extend its foreclosure sale moratorium for borrowers that potentially qualify for the program.
The company will offer the refinancing options available under the plan to customers with loans owned by Fannie Mae and Freddie Mac. Under the Making Home Affordable program, these agencies will provide loans as high as 105 percent of the property’s value. The company will offer the Home Affordable Modification Program for its own loans and loans it services for Fannie Mae and Freddie Mac, as well as for all other investors unless their servicing contracts prohibit it.
“The affordability focus of the new loan modification plan is consistent with Bank of America’s streamlined loan modification program launched last year. We have confidence in this new plan as it broadens the opportunity to help more homeowners,” said Barbara Desoer, president of Bank of America Mortgage, Home Equity and Insurance Services. “We appreciate that the Obama Administration and the U.S. Treasury have been working closely with leading mortgage servicers, mortgage insurers, industry representatives, consumer groups and other interested parties to develop the guidelines released today.”
Desoer noted that the company has temporarily realigned associates from other areas of the division to support anticipated call volume from Bank of America and Countrywide customers.
In January, under existing programs and commitments, Bank of America completed nearly 39,000 loan modifications for customers who were experiencing financial challenges. The company has made a three-year commitment to offer loan modifications to as many as 630,000 customers, representing more than $100 billion in mortgage financing. More than 5,900 associates are focused on home retention efforts on behalf of Bank of America and Countrywide customers.
The U.S. Department of the Treasury advises homeowners interested in refinancing to first contact Fannie Mae (800-7FANNIE) or Freddie Mac (1-800-FREDDIE) to determine if they are the investor on the loan.
Bank of America
Bank of America is one of the world’s largest financial institutions, serving individual consumers, small and middle market businesses and large corporations with a full range of banking, investing, asset management and other financial and risk-management products and services. The company provides unmatched convenience in the United States, serving more than 59 million consumer and small business relationships with more than 6,100 retail banking offices, nearly 18,700 ATMs and award-winning online banking with nearly 29 million active users. Following the acquisition of Merrill Lynch on January 1, 2009, Bank of America is among the world’s leading wealth management companies and is a global leader in corporate and investment banking and trading across a broad range of asset classes serving corporations, governments, institutions and individuals around the world. Bank of America offers industry-leading support to more than 4 million small business owners through a suite of innovative, easy-to-use online products and services. The company serves clients in more than 150 countries. Bank of America Corporation stock is a component of the Dow Jones Industrial Average and is listed on the New York Stock Exchange.