Dollar Diplomacy

Jesse Walker | June 18, 2009

The Yekaterinburg summit of the BRIC nations—Brazil, Russia, India, and China—ended earlier this week, and the dollar's status as the world's reserve currency is safe for now, though the long run looks much iffier. Just a day after the meeting, Russia and China agreed to switch a large chunk of their bilateral trade to their national currencies. China had already arranged currency swaps with several other countries, including Brazil. Don't be surprised to see similar shifts in the future.

At any rate, the biggest story of the summit isn't the conclusions those countries reached about currencies or any other topic. It's the fact that they met in the first place, and that they denied the United States a seat at the table. The unipolar moment is over.

Comments

|6.18.09 @ 12:39PM|#

You don't know the power of the Dark Side of the Currency!

Cabeza de Vaca|6.18.09 @ 12:52PM|#

Why is Lord Vader on the currency, instead of Emporer Palatin?

Kyle Jordan|6.18.09 @ 12:57PM|#

Palpatine is on the $100. Vader's on the $1, $5, $10, $20, and $50 in more and more threatening pics/poses as the amount rises. Each individual region has a set of coins that have the Governor on them.

I wants me a Tarkin Silver Dollar.

Kyle Jordan|6.18.09 @ 1:00PM|#

And don't forget Dark Helmet on the Imperial Food Stamps too.

Fascitis Necrotizante|6.18.09 @ 1:08PM|#

So Yekaterinburg is now some king of convention hub? Do they get to meet in the building where they imprisoned and executed the Romanovs?


...further research has shown me that it's apparently a million-strong city with skyscrapers and shit. Who knew.

|6.18.09 @ 1:41PM|#

Immediately following the summit the Chinese announced that though they plan to keep the dollar as a supranational reserve currency for now they plan to diversify later here is more :
http://www.newsy.com/videos/making_cents_of_bric
Also, in an effort to bolster the SDR bond market, and to increase their political/economic clout each of the nations is paying into the IMF kitty.

|6.18.09 @ 2:16PM|#

Just a day after the meeting, Russia and China agreed to switch a large chunk of their bilateral trade to their national currencies.

Note that these are necessary declarations of national policy, as both governments own huge parts of their economies and directly control much of bilateral trade done by the private sector through required ministry approvals.

Mr. Medvedev said the two countries had signed oil deals worth a total of around $100 billion

That's over a pipeline run by Transneft (100% owned by the Russian government) for shipping oil from fields run by Rosneft (80% owned by the Russian government) to refineries owned by CNPC (100% owned by the Chinese govenment).

|6.18.09 @ 2:27PM|#

What happens to Chinese foreign policy when the US Government owns 30% of Shanghai GM?

Paul|6.18.09 @ 3:05PM|#

Interesting to see these first cracks appearing America's status as a global economic leader.

|6.18.09 @ 3:19PM|#

What happens to Chinese foreign policy when the US Government owns 30% of Shanghai GM?

The real question is, what happens to American foreign policy when the Chinese government has the power to seriously mess up Shanghai GM? By investing massive political capital in GM, including Shanghai GM, Obama has given leverage to the Chinese, not vice versa.

JB|6.18.09 @ 3:43PM|#

The beginning of the end.

jtuf|6.18.09 @ 7:49PM|#

The unipolar moment is over.

Finally. I don't know about you guys, but I'm looking forward to not having the weight of the world on our national shoulders.

MJ|6.18.09 @ 11:35PM|#

I find your lack of faith in fiat currency disturbing.

Drew|6.19.09 @ 12:40AM|#

Competition is the health of the economy.

|6.19.09 @ 4:19AM|#

Those who live in glass fiscal houses should beware those armed with BRICs. On the other hand, the glaziers are rubbing their hands in glee.