Lisa Simpson
Aug 3,2009
In: Finance

The Domination of the Dollar is Questioned by India, Russia and China

dollar

India has teamed up with Russia and China in questioning the domination of the American dollar. Suresh Tendulkar Chairperson to the Economic Advisory Council of the Indian Prime Minister Dr. Manmohan Singh has been telling the government to hold fewer dollars in its foreign exchange reserve that calculates to $264.6 billion. He was being interviewed at an economic conference in Aix-en-France. He said, “The major part of Indian reserves is in dollars — that is something that’s a problem for us.”

The Prime Minister will be joining leaders of Group of Eight – USA, Japan, Germany, Britain, Italy, France, Russia and Canada. The summit will be held in Italy from 8th to 10th July in Italy focusing on the world economy. Representatives from China and Brazil will also attend the summit.

With the nearing of the talks, China together with Russia have started stepping up discussions on the international currency reserves – its composition and management with stress being laid on a shift of power to the emerging markets away from the developed countries that were responsible for this grave financial crisis.

Zeng Peiyan the former vice premier of China said, “There should be a system to maintain the stability of the major reserve currencies.” He was delivering a speech in the capital of China, Beijing on 3rd July 2009, focusing on the concerns of China regarding the international monetary system that has so far been dominated by the dollar. He reiterated that deficits in finance should be supervised effectively by USA otherwise he said, “Your currency is likely to become my problem.” Currently Zeng heads a centre for research under the aegis of the highest economic planning body of the government. On July 26th 2009, the People’s Bank of China has stated that the IMF should come forward to manage the reserves of the members.

Dimitry Medvedev, the President of Russia has been calling again and again for setting up of mixture of regional reserve currencies as part of the move to tackle the international financial disaster. He has questioned the future of the dollar as the world rserve currency. At the London conference of Group of 20 of the important developed and developing countries last April the suggestion had been put forward by Russion of creating a supra-national currency. Sergei Prikhodko, the aide of Medvedev speaking to reporters in Moscow said that Russia would resume talks on the supra-national currency at the G-8 meeting to be hold from July 8th to 10th at L’Aquila.