reserve currency

According to European Council President Herman Van Rompuy, Chinese yuan will someday play a significant role as a global reserve currency while the U.S. dollar will remain an important currency.

"We live in a multi-polar world and a multi-currency world more and more, and that's the case for the rise of the euro as a reserve currency. The dollar stays as an important currency," Van Rompuy said during a visit to a Shanghai business school.

Deputy governor of Chinese central bank Yi Gang said in remarks published on Thursday that the yuan could potentially become a world reserve currency as the country gears up to boost its global presence.

"Why do global investors like to hold a certain currency and make investments in a market? They mainly consider its safety, returns and depth, and the liquidity of the market. China's market and the yuan have full potential," Yi said in an article published in the official Financial News.

Jim Rogers, a prominent expatriate American investor and financial commentator, said on Wednesday that the euro and the pound are unlikely to exist as currencies over the long term.

"The euro will probably break up in the next 15 to 20 years," Rogers said in an interview. "Don't get me wrong, I own the euro."

 The head of the International Monetary Fund Dominique Strauss-Kahn said that as the world needs more stability in the global currency area it can no longer rely on a currency issued by a single nation as it has been the case since the countries declined the gold standard. The IMF head repeated that the new currency unit can come from the Special Drawing Right as it was also proposed by China.

"That probably has to be a basket," Strauss-Kahn said of the eventual replacement for the U.S. dollar.

 According to Damon Vickers, chief investment officer of Nine Points Capital Partners, the US dollar is going to be "utterly destroyed" and become "virtually worthless" on the grounds of absence of real resources supporting the currency. He cited other countries as those who have real potential as they deal with exporting of real goods.

 On Thursday gold prices eased slightly while remaining near $1,100 an ounce after hitting an all-time high for the second straight session on a weak dollar the previous day.

 Spot gold XAU= was at $1,088.45 an ounce at 0540 GMT, down 0.4 percent from New York's notional close of $1,092.35. It rose to an all-time high of $1,097.25 on Wednesday.

 U.S. gold futures for December delivery GCZ9 were at $1,089.20 an ounce, up 0.2 percent. Futures hit a record $1,098.50 on Wednesday.

 China should unshackle the yuan from its dollar peg and follow Singapore's lead in targeting a basket of currencies to determine its exchange rate, Merrill Lynch's China economist said on Wednesday.

Linking the yuan to the dollar had done China more harm than good over the past two years, attracting both hot money inflows and international criticism, but a sudden shift to a fully market-determined exchange rate was off the table, Ting Lu said.

 Roughly half of the International Monetary Fund’s gold it agreed to sell as part of a plan to shore up its finances and lend at reduced rates to low-income countries was purchased by India for $6.7 billion as central banks across the globe are trying too diversify their holdings to protect their nations against falling dollar.

It is the first sale of IMF in nine years which constitutes about 8% of world annual mine production. India, the world’s biggest gold consumer, that previously held 358 tons, bought 200 tons from the IMF.

 On Friday the Bolivarian Alternative for the Americas (ALBA), the leftist Latin American trade bloc, plans to consider and approve measures directed to replace US dollar with a new virtual currency for regional commerce, as reports the Associated Press.

 Reports that Gulf Arab states were in secret talks to replace the greenback in the trading of oil have weighed on the dollar and pushed gold to new record highs above $1,000 an ounce, despite the fact they were denied by Saudi Arabia's central bank chief and other officials in the region.

But moving away from the US dollar does not mean the role of reserve currency can be easily filled, or that more currencies will be ready to share the position, experts told CNBC Wednesday.

 Addressing a news forum at the the Newseum in downtown Washington the US Treasury Secretary Timothy Geithner stated that America along with the rest of the world should be persuaded that the United States has strong intention to keep its currency stable and that the American people will be more modest in its demands.

"A strong dollar is very important to this country, I mean that, and it's very important that people recognize it," he said.

 The US economy needs another cash infusion to take off, as the first stimulus package was insufficient to help the US consumer start spending, and longer-term it needs to devalue the dollar, investor Wilbur Ross told CNBC Tuesday.

President Barack Obama's efforts to kick-start the economy by programs such as cash for clunkers need to be followed by "more dramatic" efforts, Ross told "Squawk Box."

 Robert Zoellick, World Bank President, warned the United States that the dollar’s position as a reserve currency should not be taken for granted as there are other options emerging on the world scene. Zoellick said global economic forces were shifting and it was time now to prepare for the fact that growth will come from multiple sources.

"The United States would be mistaken to take for granted the dollar's place as the world's predominant reserve currency," he said. "Looking forward, there will increasingly be other options."