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PCU, new world reserve currency?
Filed Under (Breaking News) by Ian Richardson on 29-06-2009
I’ve been working closely with a very successful businessman who has been teaching me quite a bit over the past few weeks.
He wrote something recently that I wanted to share with everyone and get some comments happening on what he has to say.
Here’s what Charles had to say (or write in this case).
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A regional and trade currency is developing fast. The often discussed Pacific Currency Unit (PCU) incorporating the Australian Dollar, Canadian Dollar, New Zealand Dollar and United States Dollar are moving to convergence rapidly. It is rumoured that the Reserve Bank of Australia (RBA) and central banks of Canada, New Zealand and United States are near agreement on a single currency as a synthesis of those currencies, and it will incorporate the Pacific Islands.
It has been concluded from research emanating from Stanford University over a number of years that the time is now approaching for the creation of a Pacific Currency Unit (PCU) embracing the AUD, CAD, NZD, and the USD as a regional and perhaps reserve world currency.
It is believed the PCU could assist the rest of the World to significantly release itself it depended on US currency and US Economic policy., in perhaps becoming a new world currency, could assist the rest of the world release itself from total dependency on the US currency. Research and analysis on this initiative commenced at the Stanford Business School many years ago.
This foregoing view has been a pursuit through research and value analysis conclusions of banking sector participants. The belief that the Australian dollar is clearly undervalued, compared to the US dollar and certain other currencies, is now widely held and confirmed by the purchasing power parity theory in the long term. The pending revaluation of the AUD to parity with the USD in the free foreign exchange markets is gaining pace with a view to it occurring within a very short time.
To establish a model for the PCU one must observe the evolution of the European Currency Unit (ECU). Other regional currencies have been mooted in recent times, however the dissimilarity of their monetary and fiscal policies have not allowed them to develop. This refers to the TIGER, AMIRO, and the Asian Pacific Currency Unit. However, the development of the ECU has provided the opportunity for a more efficient trading environment based on a single currency because of the consonance of critical economical variables. Its success over the last fifteen to twenty years has confirmed that the creation and development of a regional currency can benefit significantly countries of similar political, economic and social structural dimensions.
It may be said that geographic proximity may be a factor in the development of trading relations, as it is clearly more advantageous to trade with neighbouring countries. This engenders closer political associations and fosters other relations beneficial for each country. In the case of Oceania other factors outweigh this variable.
However, from a regional perspective, a pecuniary link between Pacific countries might act as a conduit for political and/or economic accountability and cooperation. The PCU is a concept that would be very attractive to financiers, traders and as well governments.
The logistics necessary for the development of the PCU are to say the least, quite significant. A foremost consideration is the ideological differences and similarities among nations and in the case of Oceania these are fundamentally minimal. The ever increasing trade volumes within the Oceania region have created the need for a common currency or monetary instrument that will facilitate transactions and minimize exposure to exchange fluctuations.
The PCU would allow hedging of currency risk and act as a widely accepted currency for trading purposes and as well represent a benchmark. With the current GFC, nations whose currencies would be represented in the basket during these challenging times would seemingly be more co-operative. Such co-operation is more feasible when facing a common challenging world economic predicament.
Currency traders love the Aussie dollar so it is recommended to buy because it is mooted to rise to parity with the US dollar soon. Apparently the same goes for the NZ dollar.
For further information please refer to http://www.TheScarfamTrust.com
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So there you have it.
What do you think?
Please leave a comment as I will be showing Charles and he is very interested in what others think.
Catch you later
Ian
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