Brazil, China team up against the dollar

Stephen C. Webster

Brazil and China are teaming up to initiate the decline of America's currency as the world's reserve standard.

From The Financial Times:
Brazil and China will work towards using their own currencies in trade transactions rather than the US dollar, according to Brazil’s central bank and aides to Luiz Inácio Lula da Silva, Brazil’s president.

The move follows recent Chinese challenges to the status of the dollar as the world’s leading international currency.

Mr Lula da Silva, who is visiting Beijing this week, and Hu Jintao, China’s president, first discussed the idea of replacing the dollar with the renminbi and the real as trade currencies when they met at the G20 summit in London last month.

People's Bank of China Governor Zhou Xiaochuan said ahead of the 2009 G-20 summit that he wants to replace the dollar, installed as the reserve currency after World War II, with a different standard run by the International Monetary Fund (IMF).

Both Federal Reserve chief Ben Bernanke and Treasury Secretary Timothy Geithner have said they would not allow the dollar to be stripped of the premier status as suggested by Beijing.

China, the top holder of US Treasury bonds with 739.6 billion dollars as of January, according to US figures, earlier expressed concern over its investment as the world's largest economy battles a deep recession.