The most important story of the day might not be the bank rescue plan in the US or any of the British domestic political stories, but this news from China:
“China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.
The goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies,” Zhou Xiaochuan, governor of the People’s Bank of China, said in an essay posted in Chinese and English on the central bank’s website.” At the moment, this is just the Chinese causing some mischief. There’s no realistic prospect of this happening in the near term, The Chinese are too invested in US dollars and Treasuries to move out of them without causing themselves significant loses. But once this crisis is over, China could begin to diversify its holding which would have a significant impact on the US.