Why would China think a new currency would be safer than the dollar?

[Dennis S]

Talk about risky.

[JoeH]

What new currency are you talking about? About the only thing the Chinese have mentioned was the possibility of setting contract prices based on an index calculated based on several of the stable currencies such as the dollar, yen and euro.

[Dennis S]

http://www.google.com/hostednews/afp/art...na-J4SVT7w

OK. It says in here it would be a basket of currencies:

http://capital-en.trend.az/economy/macro/1447694.html

[Mac1337]

Dennis S wrote:
http://www.google.com/hostednews/afp/art...na-J4SVT7w

OK. It says in here it would be a basket of currencies:

http://capital-en.trend.az/economy/macro/1447694.html

Would we call it a basket case then?

[ajakeski]

Will they call it the dorrar?

[Black]

ajakeski wrote:
Will they call it the dorrar?

I didn't think it was possible, but you made Dakota look classy by comparison. Good work.

[Black]

Dennis S wrote:
Talk about risky.

[Acer]

I read about this (too lazy to find a link). Some sort of instrument cobbled together by the International Monetary Fund, for instance. Of course, just creating a currency by fiat does not make it stable.

[RgrF]

Stable is as stable does. It's all a matter of agreement. If we create a new currency called the zlotney and we all agree it's of value, it becomes of value.

The reason the US dollar has held any value is that other currencies were perceived as weaker, that perception is changing and something will replace it.

[Acer]

There's more than just belief involved. The U.S currency was attractive because of very real, measurable factors: our large and productive economy with a stable government implied that it would retain its value without inflating or deflating excessively, through bad times and good. Yes, there's a measure of faith here, but there's also a huge GDP, for example, to support that faith.

How do you create that out of nothing? Sure, our governments can "agree" that the zoltney "shall be stable" but you can't force the markets to agree.