We all know the U.S. dollar is the de facto world reserve currency.
And if you've been reading my column for a while, you also know its status is being seriously challenged.
China and Russia have taken the biggest steps to that end so far.
But it seems we may already be in the planning stages to consolidate currencies, with the ultimate goal of establishing a single currency for the entire planet.
Hard to envision, but the signs are there.
That's something not meant to benefit you or me, but there are ways to leverage this intensifying trend to your advantage…
Advice from Chicago That's Sure to Be Followed Globally
"You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before." –Rahm Emanuel
That, I'm afraid, is exactly what will happen when (not if) the next major economic crisis hits. I'd even venture to guess it's Rule No. 1 in the "central planners" rulebook.
Major new laws like FATCA (Foreign Account Tax Compliance Act) and a growing acceptance by major governments of a digital currency, like Bitcoin, are simply setting the stage.
The ultimate goal is to establish and roll out a single, planetary currency regime. There will, quite simply, be no alternative available.
It's all about control.
In 1969 the IMF created an international reserve asset called the SDR (Special Drawing Rights) to support the Bretton Woods fixed exchange rate system then in place. Any IMF member that wanted to participate in the system required official reserves of gold and broadly accepted foreign currencies.
Those assets were to be available to buy up that nation's currency in forex markets in order to help maintain existing (fixed) exchange rates.
However, two of the key reserve assets, gold and the U.S. dollar, were in too short supply to accommodate expanding world trade at the time. So the SDR came to life.
Yet only four years later the Bretton Woods system broke down, especially after Nixon closed the gold window. By March 1973 the world's major currencies were "unpegged" and began to trade freely at market-determined rates against each other.
The SDR's role was severely diminished… for a while.
To save the U.S. dollar's dominant position, Nixon and Kissinger hatched the petrodollar system, guaranteeing a constant and elevated (though artificial) demand for U.S. dollars worldwide.
Consolidating Signs Are Everywhere, but We're Not Worried
China and Russia right now appear to be the biggest threats to U.S. dollar hegemony, a topic I've discussed here and here. An ever-increasing amount of trade and large transactions between China, Russia, and several of their trading partners (swap deals) are taking place in their own currencies, bypassing the U.S. dollar completely.
But another significant trend I see emerging is one of regional currencies. The euro has been around since 1999 and is used today by 23 countries encompassing 334 million Europeans. Another 210 million people use other currencies that are pegged to the euro.
And despite challenges to the euro's integrity, there's considerable political will to ensure its survival. After all, it was Mario Draghi, president of the European Central Bank, who said, "…the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough."
With the BRICS currency reserve pool and BRICS Development Bank likely to be officially announced this summer, the foundation's being set for a potential new regional currency for its members in the future.
That could establish a currency to be used by a consolidated 41% of the world's population.
About the Author
Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.