Will the world ditch the dollar?

The repercussions of China’s call for a new global reserve currency

What happened

Chinese central bank head Zhou Xiaochuan advocated creating an IMF-administered “super-sovereign reserve currency” to replace the U.S. dollar as the de facto global currency. The proposal, backed by Russia, is expected to be a topic at the G-20 meeting in April. President Obama, Fed Chairman Ben Bernanke, and Treasury Secretary Timothy Geithner all rejected the “global currency” idea Tuesday. (Bloomberg)

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Making a change might not be all bad for the U.S., said Justin Fox in Time. Having the dollar as the world’s reserve currency lets the U.S. run up big deficits on the cheap—but being forced to live within our means is a better long-term economic strategy.

The dollar isn’t going anywhere, said Dale McFeatters in a Scripps newspapers editorial. It became the world’s currency through a “long evolutionary process” in which it replaced the British pound. China’s yuan may someday join the dollar, and to a lesser extent the euro and the Japanese yen, as a global reserve currency, but creating a super-sovereign currency “from scratch” faces too many obstacles.