Talk of the euro replacing the dollar has diminished lately, what with the realisation that Euro Area economies face massive financial risks of their own.Bloomberg: “If you start having serious problems credit wise with the likes of Spain, then the issue for the euro’s credibility and its pricing against other currencies becomes a much bigger issue,” O’Neill said in an interview with Bloomberg Radio in New York today.
Thus it’s interesting that Russia and China are now investigating the Canadian dollar as a U.S. dollar alternative.
Business Week: Canada’s Finance Minister Jim Flaherty said China, with the world’s largest currency reserves of $2.3 trillion, may be poised to buy Canadian dollars as it seeks to shield its reserves against the U.S. dollar’s decline.
“It does not surprise me that China and Russia would take greater positions in the Canadian dollar than they have previously,” Flaherty, 59, said during an interview in his office in Ottawa. “I would expect countries looking around the world to invest in market currencies that are reliable.”