The renminbi might well make a fine regional reserve currency, but the global reserve currency system is likely to gravitate towards a combination of gold, dollar, yen, renminbi and perhaps even oil.

FORBES

Krugman and much of the left are content to lean on QE2 to deliver the next bubble without high inflation, an outcome they have been able to secure repeatedly in the paper dollar reserve currency system.

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The US Federal Reserve has a system to control the amount of currency in circulation.

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Enthusiasts argue it will thereby end the privileges Americans have reaped from having the world's only reserve currency such as steering the international monetary system and running unlimited trade deficits.

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Along with the FDIC, the draft is the work of staffers at the Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System, and the Securities and Exchange Commission.

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Mr Zhou calls for a radical reform of the international monetary system in which the dollar would be replaced as the main reserve currency by a global currency.

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This conundrum may also be viewed in terms of the significance of the behavior of the monetary base, which is a combination of bank reserve deposits at the Fed (both required and excess) and currency outside the banking system.

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