Reinvent international monetary order or face Chinese dominance - France
"The Bretton Woods order as we know it has reached its limits," French Finance Minister Bruno Le Maire told a conference at the French central bank marking the 75th anniversary of the conference.
"The alternative we have is now clear – either we reinvent Bretton Woods or it risks losing relevance and eventually disappearing," he said.
It looks like the French try to mislead others, and themselves.
No matter how you reinvent the IMF, the dollar system is too broke to repair. The current dollar system is a left-over of the dead Breton Woods Agreement, which was killed by Nixon in 1971. Its survival today completely rests on the Saudis' goodwill to the petro-dollar. As Trump's Iran gamble is in big trouble, the Saudis are ready to jump ship. So, the dollar system is ready to fall off from the cliff.
What prevents the Saudis from leaving the sinking dollar boat is their enormous wealth that they have accumulated over the past several decades. These Saudis assets currently are in dollars because there is no other currency that is big enough to hold their wealth. Once the Saudis find a place to hold their wealth, they will abandon the dollar just as determined as Nixon abandoned the dollar gold standard. And the petro-dollar will then become a thing of the past.
Dedollarization is gaining ground. China is in the process to open up its capital market to allow foreigners to transfer their dollar-based assets into Yuan-based assets. Russia has dumped almost its entire dollar assets. Many central banks are buying gold to hedge their dollar liabilities. In the mean time, the rich people in the US and other Western countries are anxious to explore unconventional ways to hide their wealth from an inevitable death of the dollar system. Facebook's efforts to launch a cross-border digital currency, the Libra, just show you how confident the rich really are to the dollar system, and how unworthy the dollar system really is.
"The Bretton Woods order as we know it has reached its limits," French Finance Minister Bruno Le Maire told a conference at the French central bank marking the 75th anniversary of the conference.
"The alternative we have is now clear – either we reinvent Bretton Woods or it risks losing relevance and eventually disappearing," he said.
It looks like the French try to mislead others, and themselves.
No matter how you reinvent the IMF, the dollar system is too broke to repair. The current dollar system is a left-over of the dead Breton Woods Agreement, which was killed by Nixon in 1971. Its survival today completely rests on the Saudis' goodwill to the petro-dollar. As Trump's Iran gamble is in big trouble, the Saudis are ready to jump ship. So, the dollar system is ready to fall off from the cliff.
What prevents the Saudis from leaving the sinking dollar boat is their enormous wealth that they have accumulated over the past several decades. These Saudis assets currently are in dollars because there is no other currency that is big enough to hold their wealth. Once the Saudis find a place to hold their wealth, they will abandon the dollar just as determined as Nixon abandoned the dollar gold standard. And the petro-dollar will then become a thing of the past.
Dedollarization is gaining ground. China is in the process to open up its capital market to allow foreigners to transfer their dollar-based assets into Yuan-based assets. Russia has dumped almost its entire dollar assets. Many central banks are buying gold to hedge their dollar liabilities. In the mean time, the rich people in the US and other Western countries are anxious to explore unconventional ways to hide their wealth from an inevitable death of the dollar system. Facebook's efforts to launch a cross-border digital currency, the Libra, just show you how confident the rich really are to the dollar system, and how unworthy the dollar system really is.