Given the dollar’s horrible performance, it only makes sense that secret meetings would happen between countries forced to depend on it.
Rick Santelli: “If you were in the role of having to use a currency that wasn’t yours, that was a reserve currency, that had all of the dynamics of the dollar, how many secret meetings would you have on your schedule?
We went through an entire credit crisis where everybody ignored the Roubinis, ignored all the writing on the wall for years, are we going to do the same thing with our currency?”
Yet foreign central banker dreams aside, it will be much harder for countries to actually stop using the dollar than they may even believe.
For example, many of the alleged “secret meeting” attendees manage their own currencies relative to the dollar. They’ll be hard-pressed to meaningfully disengage from dollars without destroying their export competitiveness and enraging related local industries and political interests.
Even for international transactions such as in oil, the dollar simply makes things far easier than dealing with multi-currency pricing systems.
CNBC: “It seems to me that the denominating price of crude needs to done in dollars. It needs to be done in a common currency, not just for Gulf crudes, but also for crudes in the U.S., the North Sea and everywhere else,” John Vautrain, director & VP at Purvin & Gertz, said. “If we had a Gulf crude that was denominated in some basket of currencies, or a GCC currency, how do you exchange that versus a WTI barrel or a Brent barrel that’s denominated in dollars?”
Obviously there’s been a lot of discussion amongst the BRIC nations. China has spoken outwardly about how advantageous it would be to have a super international currency rather than relying on the dollar as the reserve currency,” John Noonan, senior FX analyst at Thomson Reuters, told CNBC. “But the time frame is the problem. This is not going to happen overnight, maybe over 9-10 years.”
Accepting the dollar may be a matter of trade-offs whereby the alternatives remain too painful for foreign nations to bear. There’s always the off chance that the US eventually gets its act together as well. Especially if we get more people like Rick Santelli on TV (below).