World Bank head, Robert Zoellick sees U.S. Dollar role as diminishing globally

Even though over the longer term Zoellick is no doubt correct during the stock market decline money flowed into US treasury notes as a safe haven as investors became very risk averse and this in spite of the fact that interest payments were minimal. Now that the stock market is recovering though the dollar is weakening and other currencies as well as gold are gaining value relative to the dollar. If countries such as China decide to start abandoning the dollar its significance could as Zoellick points out very well decrease especially if the US debt continues to balloon and the US creates more and more dollars. These short excerpts are from the NY Times.

...The president of the World Bank said on Monday that America's days as an unchallenged economic superpower might be numbered and that the dollar was likely to lose its favored position as the euro and the Chinese renminbi assume bigger roles.

......Mr. Zoellick, who previously served as the United States trade representative and as deputy secretary of state under President George W. BushPresident George W. Bush, said that the euro provided a "respectable alternative" for financing international transactions and that there was "every reason to believe that the euro's acceptability could grow."

In the next 10 to 20 years, he said, the dollar will face growing competition from China's currency, the renminbi. Though Chinese leaders have minimized their currency's use in international transactions, largely so they could keep greater control over exchange rates, Mr. Zoellick said the renminbi would "evolve into a force in financial markets."

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"The greenback's fortunes will depend heavily on U.S. choices," Mr. Zoellick said. "Will the United States resolve its debt problems without a resort to inflation? Can America establish long-term discipline over spending and its budget deficit?"