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Thursday, 12 March 2009


Viktor O. Ledenyov

The nationalization of banks can provide an illusion of stability in short term perspective only. In long term, the Federal Reserve or Bank of England would not be able to stabilize the situation in finances, when the US and UK economies are not functional. However, the next big problem would be a shift to the new reserve currencies away from the US dollar. The new reserve currencies have to be stable monetary exchange units in the corresponding national economies and have to satisfy the following conditions:
1. The new reserve currency has to appreciate over time;
2. The new reserve currency has to be convertible on the currency exchange markets;
2. The interest rates set by central bank have to depreciate over time;
3. The inflation has to be as low as possible
So, the question to understand is: What are the best candidates for the position of new reserve currency in the World. Of course, the P.R. China currency may be an attractive option.

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