Critics are putting pressure on the Bank of England to prepare the UK in the advent of the US Dollar collapsing.
Economists argue that the UK is “too exposed” to the movement of the Dollar. The United States is the largest debtor nation in the world and “it’s getting worse and worse,” according to investment guru Jim Rogers. The investor explained that the US currency is going to get higher but many countries like China, Iran, Russia and others are now trying to get rid of it.
“In the next few years the American dollar is going to lose its position as the world’s reserve currency and the world’s medium of exchange,” Rogers said, adding that the world has always moved away from dominant currencies in the past as situations changed.
He said that the British pound once used to be the dominant currency in the world, and before that there were other dominant currencies like the Spanish peseta, the French franc, and the Dutch guilder.
“They all had that position at one time or another but then went to excess and are not that sound anymore, they lost their position… People don’t like Washington’s power, so they are moving away and finding ways to get away from the dollar. It has happened throughout history, it happened to the pound sterling, you know the rest of that story,” Rogers said, adding there’s no need to worry because “it’s not a disaster.”
He cited Russia and Turkey as examples of countries that are now starting to trade with each other directly in their own currencies. “Everybody is now trying to get rid of the US dollar,” he said.
Talking about the possible alternative currency which could replace the greenback, Rogers said: “The only one I see on the horizon is China’s renminbi [yuan – Ed.], but not any time soon. The renminbi is not even convertible yet so it is impossible for a while.”
The investor added that we could have regional currencies for a while but there’s no sense in having two or three dominant currencies.
Many have argued that the UK should return to a bi-metallic currency which is more stable.