Weaponized News New World Order politics, economics and current events
by Thanong Khanthong | The Nation/Asia News Network | March 22, 2015
Washington is losing its clout. Its allies in Europe – the UK, Germany, France and Italy – have applied to become members of the China-led Asia Infrastructure Investment Bank (AIIB), defying US calls for them to exercise caution.
The institution is seen as a rival to the World Bank and the Asian Development Bank.
Once the AIIB gets off the ground, it will become an international financial institution to be reckoned with, offering financing for infrastructure projects in yuan-denominated loans.
This is the underlying reason for Washington’s concern over the creation of the AIIB. Allowing the yuan to flourish will hit the international standing of the US dollar as the world’s reserve currency of choice.
China, Russia and other BRICS countries are moving away from the dollar, preferring to trade among themselves in their own currencies.
Not only will this reduce foreign exchange risks associated with the dollar, it will also promote the use of their own currencies.
Washington cannot afford to let a new international foreign exchange regime come into being.
With a budget deficit of $1 trillion (S$1.4 trillion) a year, the US needs to finance its debt with borrowing. If the dollar’s credibility is questionable, fewer and fewer countries and funds will be willing to become the US’s creditors by buying up US bonds.
The dollar will be dumped. Interest rates will rise, hurting the economy and the financial markets. The chain reaction will bring another round of financial crisis.
