Reserve currency: the coming change is inevitable

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2018-03-23 05:04:07

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The World's reserve currency, which today is the us dollar, is designed to solve the problems of financing international trade and the storage and accumulation by countries of their financial reserves. Over the last 65 years, the US dollar did just fine with this function, but it seems that his time is coming to an end, and the single currency system will soon cease to exist, replaced by a two-track or that the world standard.

reserve currency'sTo justify this statement, let us consider in detail what a reserve currency. Is such currency, which do not exist any limitations associated with its treatment, which is most widely used in investment and barter transactions, acting as a universally accepted reserve.

To the currency of any country received the status of reserve, you must meet the following prerequisites:

  • This country needs to lead in world production, the export of capital and goods, storage of gold reserves.
  • Credit market needs to be large enough and be of high level of the organization
  • The country needs to be broad, well-developed network of credit and banking institutions on its territory and abroad.

In addition, a reserve currency needs to be convertibility, stable exchange rate and favourable legal regime for use in international transactions.

reserve currencyThe Global financial crisis clearly demonstrated that the dollar alone is hard to cope with features that should perform a reserve currency. In the United States, the macroeconomic situation is far from ideal, in particular, this concerns the threat of the fiscal cliff, increasing the national debt (projected in 2014, he will be 18532 billion dollars.) the tense situation in the field of employment.

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All of this suggests that in the near future there will be a new monetary order in which the concept of "main reserve currency" will disappear, and on change to it is likely to come a basket of several currencies.

In this regard, more and more there is a variety of assumptions regarding the future prospects of the Russian ruble, which may well turn into the reserve currency on a regional scale.

world reserve currencyIn principle, it is quite possible that such chances do exist. However, for this to occur, Russia has formed a complete market of state bonds. While he is absent, to speak about any status not make sense, since this condition is the key to the ruble has become one of the reserve currencies.

The Second condition is low inflation and stability. In the future, these goals can be achieved to the 2014-2018 years. The current reality is that the Russians are reluctant to keep their savings in investment institutions or banks. At the same time to store mainly choose Euro or dollar. It is unlikely in the near future the situation will change radically.

It is Necessary that the government strongly promoted the development of exchange trade, free convertibility of the ruble and the sale of Russian bonds on the international markets. Protection in Russia of property rights, the development of stock and financial markets, corporate law and sustainable banking system – that can significantly help the ruble to become the new reserve currency. If the government will make every effort to improve the investment climate, there will be plenty of investors who are interested to use the Russian ruble as the replacement reserve currency.


Article in other languages:

AR: https://tostpost.com/ar/finance/4525-reserve-currency-the-coming-change-is-inevitable.html

BE: https://tostpost.com/be/f-nansy/8033-rezervovaya-valyuta-buduc-nepazbezhnyya-perameny.html

DE: https://tostpost.com/de/finanzen/8035-reservew-hrung-kommen-die-unvermeidlichen-ver-nderungen.html

ES: https://tostpost.com/es/finanzas/8040-moneda-de-reserva-vienen-los-inevitables-cambios.html

HI: https://tostpost.com/hi/finance/4527-reserve-currency-the-coming-change-is-inevitable.html

JA: https://tostpost.com/ja/finance/4525-reserve-currency-the-coming-change-is-inevitable.html

KK: https://tostpost.com/kk/arzhy/8038-rezervt-k-valyuta-lg-alsa-neizbezhnye-zger-ster.html

PL: https://tostpost.com/pl/finanse/8037-waluty-rezerwowej-zbli-a-si-nieuniknione-zmiany.html

PT: https://tostpost.com/pt/finan-as/8033-moeda-haver-uma-inevit-vel-mudan-a.html

TR: https://tostpost.com/tr/maliye/8042-rezerv-para-birimi-geliyor-ka-n-lmaz-de-i-im.html

UK: https://tostpost.com/uk/f-nansi/8037-rezervna-valyuta-nastayut-neminuch-zm-ni.html

ZH: https://tostpost.com/zh/finance/4889-reserve-currency-the-coming-change-is-inevitable.html






Alin Trodden - author of the article, editor
"Hi, I'm Alin Trodden. I write texts, read books, and look for impressions. And I'm not bad at telling you about it. I am always happy to participate in interesting projects."

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