"China has now proposed that the world move to a more symmetrical monetary system, in which nations peg their currencies to a representative basket of others rather than to the dollar alone. The â€œspecial drawing rightsâ€ of the International Monetary Fund is such a basket of four currencies (the dollar, pound, yen and euro), although the Chinese rightly suggest that it should be rebased to reflect a broader range of them, including Chinaâ€™s yuan. The dollar should depreciate against Asian currencies to encourage more U.S. net exports to Asia.
"The U.S. response to the Chinese proposal was revealing. Treasury Secretary Timothy Geithner initially described himself as open to exploring the idea; his candor quickly caused the dollar to weaken in valueâ€”which it needs to do for the good of the U.S. economy. That weakening, however, led Geithner to reverse himself within minutes by underscoring that the U.S. dollar would remain the worldâ€™s reserve currency for the foreseeable future."