China moving away from the dollar

[Skybird]

Repeatedly I said that if China ever decides to exchange it's dollar reserves (and insane ammounts of American bonds which kept the US economy running) for another currency, then this would cause major damage to the US financial economy. They even have started a silent, slow moving policy to replace their dollars some time ago, like several arabian states also started to do. These actions so far were almost unnoticed, and not causing serious consequences so far. But this time eventually it could become something more real.

And I must say that if I try to see things from their perspective, they even have valid, reasonable points in their concerns.

http://online.wsj.com/article/SB123780272456212885.html

This better gets understood as a yelling wakeup call now.

Chinese officials are frustrated at their financial dependence on the U.S., with Premier Wen Jiabao this month publicly expressing "worries" over China's significant holdings of U.S. government bonds. The size of those holdings means the value of the national rainy-day fund is mainly driven by factors China has little control over, such as fluctuations in the value of the dollar and changes in U.S. economic policies. While Chinese banks have weathered the global downturn and continue to lend, the collapse in demand for the nation's exports has shuttered factories and left millions jobless.
(...)
"The outbreak of the crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system," Mr. Zhou said. The increasing number and intensity of financial crises suggests "the costs of such a system to the world may have exceeded its benefits."
(...)
Holding more international reserves in SDRs would increase the role and powers of the IMF. That indicates China and other developing nations aren't hostile to international financial institutions -- they just want to have more say in running them. China has resisted the U.S. push to make an immediate loan to the IMF because that wouldn't give China a bigger vote.

Gleithner meanwhile indicated they will need even more money for their toxic paper rescue with tax money. Which will increase state debts and budget deficit too, no matter how they are doing. I can't even speculate about the ammount of inflation we will have to battle with after the current crisis is over. To abuse a headline from the WP: there is little use in fighting a fire that way that afterwards the world is devastated in a flooding. That china and other emerging economies, but also Europeans, are loosing smypathy for an economic model doing so, and by it'S ways has caused the desaster, is fully understandable.

I think the chinese are right. and they are realistic, expressing they are fully aware that implementing a new international reserve currency not depending on a single national economy would take much time.

But if we do not get started, how much time will have passed once we have reached the day when such an implementation would have been finsihed - if only it would have been started back then?