[Currencies] don't spring up spontaneously just because the Chinese central bank governor suggests this would be a good idea, says Barry Eichengreen, an economist at the University of California at Berkeley.

FX Trading - China: Aspiring Puppet Master to the World Economy

I pledge allegiance, to the flag, of the United Currency of the World, and to the International Monetary Fund, for which it stands, one Money, more powerful than dollars, indivisible, stealing economic advantages and liberty from all.

That's only a hypothetical pledge to be adopted along with a new global reserve currency. Of course, the actual words in the pledge may change ... but you get the idea. China is speaking up. China’s central bank governor called for a new world reserve currency. We know how so many people kowtow to every word flowing from the mouth of the Dragon. So who will listen?

Zhou (apparently another J.M. Keynes fan), in his comments, did not propose something entirely crazy and new - like a euro or Amero currency - but he’s seeking (apparently) a strong push towards a system utilizing SDRs through the International Monetary Fund. (SDRs = Special Drawing Rights)

Mr. Zhou is concerned with China's current position. That is, holding boatloads of US debt. This brings me to a question: Why doesn't China just dump their US treasuries if they’re so worried? Maybe because China is looking for a big handout to get their economy moving back in the same direction as it had been rolling along before the economic crisis permeated the global economy. They don’t want to take a loss, perhaps, or eventually pay the price for their US‐dollar exposure (in the event of runaway US inflation) bred by an enormous trade surplus.

The outbreak of the [current] crisis and its spillover to the entire world reflected the inherent vulnerabilities and systemic risks in the existing international monetary system, according to Mr. Zhou.

To that point, much of the blame for the crisis is being cast upon the US ... but it was China’s massive surplus and overwhelming choice of US debt as an investment that put them in this place. These imbalances China would prefer not address or accept responsibility.

Are shortfalls in the international monetary system really to blame here, Mr. Zhou? Or is it the decision made by governments, such as your own, that sparked this outbreak you speak of?

We hear it all the time - governments are inflating into prosperity ... of course they want a weaker currency. Maybe this is why the US isn't proposing a new international reserve currency. (Time to belly up to the bar with the drunken fiats?) Or maybe, instead, it’s because a surprisingly bright light in Washington or elsewhere realizes that a plan (like the one talked about by Mr. Zhou) doesn't make sense.

Simply: not all countries are created equal.

Despite the borderline‐depression that everyone in the US is talking about, does the US economy not put to shame so many other economies, or vice versa depending on your perspective? Does it make sense to artificially even the global playing field? To some it does.

I’ll try to argue that market forces should be left to sort out the imbalances. Unintended consequences would loom large in a new, unified reserve currency effort. Perhaps that’s easy for me to say because I’m not sitting at the steering wheel of a major world economy with all eyes fixated on my refusal or acceptance of plans to fix our problems.

Though maybe global leaders (cough, cough ... US) could voice a well‐thought explanation of why inaction, in certain instances, actually makes more economic sense toward achieving a healthy recovery.

To answer my initial question at the onset of these comments: no one is listening yet. Or if they are, they're shrugging off China’s latest attempt to shake up the market with their primo economic leadership.

In other words, the US dollar is not sinking on China’s instigation of a reserve currency replacement ... or anything of that nature.

The buck is actually stronger across the board today (with the exception of everyone’s favorite Great British pound which is stronger versus the buck.

Could be three things at this stage:

1) Reaction to softer stocks after yesterday’s monster toxic‐asset‐bailout rally.

2) Part of ongoing consolidation after hitting an important 61.8% retracement level on Friday.

3) Or both.

And as Jack pointed out to me yesterday, for what it's worth: EURUSD has been closely tracking the performance of an index of emerging market stocks. Yesterday this emerging market index surged on optimism pumped into the markets by Treasury Geithner and his latest trillion‐dollar idea. The thing is, though, EURUSD didn’t do so hot. It sold off big‐time. And while it regained most of its decline in the overnight session, it’s among the biggest losers so far again today.