Changing Times - and the Changing of 'Power' ...

Following my recent post about China's desire to move their reserves away from the dollar, this article highlights that the idea is growing apace. China, India, Brazil, Mexico and South Africa last week all challenged the U.S. dollar as the primary denomination of world reserves, and today Japan's opposition party are promoting a similar idea too.  Japan holds $1.02 trillion in foreign reserves (second only in the world to China) and this article points out the fact that “if Japan and China do that, the impact will be huge”. One of main reasons given for these countries not shifting reserves away from the dollar is the fact that it would further weaken the U.S. currency and reduce the value of China's and Japan's remaining dollar holdings, i.e. the threat of losing even more money due to the dollar, rather than the security/benefit of investing in the dollar! This will undoubtedly alter the pace of change, but not the change itself, as these countries are clearly already looking at additional, and more subtle ways, of achieving this goal (e.g. Japan's suggestion of buying any future US Government bonds in Yen)!