Canada defends US$ as global reserve currency

Forbes ^ | 7/3/2009

[bruinbirdman]

The U.S. dollar as the global reserve currency of choice has been a stabilizing force during the current financial crisis, Canada said Friday, downplaying calls to debate the greenback's dominant status.

Canadian Finance Minister Jim Flaherty added his weight, at least for now, to Japan's opposition to a Chinese push for a new super-sovereign reserve currency that would displace the U.S. dollar.

Flaherty also told reporters he could see the Canadian currency appreciating as part of a worldwide shifting of foreign exchange rates to correct imbalances.

He said he did not know whether the U.S. dollar's role as the global reserve currency would be included in the final communique of a meeting between the Group of Eight leaders and a heads of emerging nations in Italy next week.

"It's an issue that we have not addressed other than to say that, in the midst of what is still a significant global recession, it's important that we aim for stability, and stability has been based on the U.S. dollar as the global currency," Flaherty said via teleconference from Chile.

China has asked for a debate on a new global reserve currency by the G8 and five emerging economies, G8 sources have told Reuters. News of the Chinese request helped push the U.S. dollar down to a three-week low Wednesday.

Flaherty said he expected there to be a more general discussion on foreign exchange at next week's summit, which starts with the G8 nations alone and then broadens to include emerging nations.

Commenting on Canada's currency, he said there was room for the Canadian dollar to appreciate further as part of the global realignment of currencies that many believe should include a rise in the Chinese yuan and a weaker U.S. dollar.

"Yes, of course it can," he said when asked if

[americanophile]

The Chinese Century: coming soon.

[rabscuttle385]

-

[4rcane]

looks like Canada’s economy is going to fall with the US with their attachment and faith in the USD

[TruthConquers]

Silly sheeple, go back to sleep and watch American Idle. /s

There have been a spat of articles today from various countries (China, India, and now Canada)protesting too much about their love for the US dollar.

Don’t believe it. We will be the last to know.

[vbmoneyspender]

It is sad state of affairs when we have to rely on friendly foreign governments to do what our own gov’t officials are failing to do.

[Jim from C-Town]

The Chinese have significant internal problems that will prevent them from attaining the status that many fear.

Demographics alone will doom them to less than first world status for most of century.

Political instability could put the death rattle on their advancement.

It is much more likely to become the Indian Century, before the Chinese century.

[Jim from C-Town]

The U.S. must rid themselves of this liberal pestilence in the White House. The taking of the House in ‘10 is most necessary to the advancement of the U.S. and World economy.

[himno hero]

The best predictor of the future is the past. Excepting now. With this ***** Obama driving the debt of america to astronomic , levels high enough to break the back of the economy, he has changed everything. The way people view the economy, the way businesses view the economy. If we remove the Obama factor,then,
at the end of the day the US will still be global commerce king, add in Japan and the G7 then the king still rules the world.
The US and the G7 were the first traders and they will be the last. The markets will rise, they will fall, and the US will still sit on the top, at every stage. Those others with the yakkety yak? Just noisy adolescents.

NOW, add back the obama factor and you may well have someone bankrupting the US of A. Doing that is the surest way into the mindless inequities of communism. That is what I think his agenda is... the dismantling of the US of A.

[familyop]

Sure. Eastern Canada wants to keep her part of our trade deficits going. ;-) And there are some concerned US business interests—mostly in the northeast.

Western Canada, on the other hand, would probably like to get more money for Canadian oil and other natural resources.

[fanfan]

Thanks for the ping, rabscuttle 385.

[Former Proud Canadian]

Re post 4. Obviously, if demand for manufactured goods declines in the US, Canada will suffer because the US is Canada's biggest export market. This is particularly true in the auto sector. Ontario produces more vehicles than Michigan, many of those are exported to the US.

That said, Canada has huge energy, mining and agricultural sectors. These sectors will survive and thrive on demand for their particular commodity. The commodities will be sold on the world market for the world price. Canada will do all right.

[Former Proud Canadian]

Re post 5. None of your trading partners want the US dollar to fall much in value. You won't be able to buy as much. Conversely, your manufactured goods will become more competitive both domestically and internationally. This is especially difficult for the Chinese.

A little devaluation of the US dollar won't hurt so much. However, I think Obama has something much more drastic in mind.

[Former Proud Canadian]

RE post 7. I agree with you. I remember people in the 1970’s pointing out the demographic problems that the Russians would be facing. Well, all the republics have now separated from mother Russia. The Chinese central government does not have that strong a grip on all of the outlying areas. A significant economic slump, a major war, or another catastrophe will accelerate their demographic time bomb.