IMF Reveals New SDR Weighting Tied to the "Big Four" In Rebuff to BRICs

[Joanne98]

The 'Washington-based' IMF chose the status quo, merely tinkering slightly with the dollar-euro-pound-yen balance in its SDR. The Anglo-American financiers threw a bone to the Europeans with a slight increase. Japan retained its place in the colonial powers club. I find it almost incredible that the UK remains a financial power to the exclusion of the BRICs.

I cannot imagine that Russia and China will be pleased with this rebuff to their concerns, although they were granted more of the trappings of power at the G20.

Now that the SDR is off the table as a broadly acceptable replacement for the dollar reserve currency regime, at least for the next five years, we might expect more regionalization of trade and the formation of new trading blocs. This implies less financial stability as the developing and commodity nations begin to rebel against the current foundations of global finance that continue to subject them to the monetary policies of the Big Four: US, Europe, UK and Japan.

As US analysts are so fond of saying, But what choice do they have? Time to open the door and let us in so we can set up a banking system for you such as that which has destroyed the economies of the developed nations.

Such are the burdens of financial leadership that 'bind your sons to exile to serve your captives needs.' And so it begins all over again.


Bloomberg
IMF Lowers Dollar, Yen Weights in Its SDR Valuation Basket, Increases Euro
By Candice Zachariahs
Nov 15, 2010 6:12 PM ET

The International Monetary Fund reduced the weighting of the U.S. dollar and the yen and increased that of the euro in its Special Drawing Rights valuation basket after its regular five-year review.

The value of the SDR, which the IMF created in 1969 to supplement its member countries official reserves, will continue to be based on a basket of currencies comprised of the dollar, euro, yen and pound, the fund said in an e-mailed statement. UBS AG, the world’s second-largest foreign-exchange trader, said in June that the fund may include the Australian and Canadian dollars in the SDR basket this year, boosting demand for the commodity-backed currencies.

http://jessescrossroadscafe.blogspot.com/2010/11/imf-reveals-new-sdr-weighting.html

[kickysnana]

1. I need an economy to English dictionary here (LOL). n/t

[westerebus]

2. Me thinks there's a bit more going on here.

As China wants a new reserve currency, the message is clear. If you want in, then float your currency with the rest of the big four. The IMF showed them there is room to make adjustments, as dollars were lessened by percentage and the euro holdings increased, in the basket.

No nation is going to kill the dollar as the reserve currency that holds dollars as a reserve in spite of how vaunted they might be.

Which is one of the reasons FED printing to purchase US debt should not be a concern. It drives inflation into emerging markets as commodity prices rise. It does not inflate values at home.

So the FED policy is directed globally and spun as national QE. It supports banks not main street.

The IMF is part of the de leveraging process employed to correct imbalances caused by banks internationally. Banks in concert with governments would be more correct statement.

Why increase the euro? Who's in trouble?

What China is not willing to do is to take the next "Great Leap Forward".