Reserve currency: inevitable changes are coming

The world reserve currency, which today is the US dollar, is designed to solve the problems of financing international trade, as well as the storage and accumulation of financial reserves by countries. For more than 65 years, the US dollar has been coping well with this function, but it seems that its time is coming to an end, and the mono-currency system will soon cease to exist, giving way to a two-currency or another world standard.

To justify this statement, let us consider in detail what a reserve currency is. This is a monetary unit that does not have any restrictions associated with its circulation, and which is most actively used in investment and commodity exchange transactions, fulfilling the role of a generally recognized reserve.

In order for the monetary unit of any country to obtain a standby status, the following prerequisites must be met:

• This country should lead in world production, export of capital and goods, storage of gold and foreign exchange reserves.
• The credit market should be capacious enough and differ in high level of organization
• The country should have a wide, well-developed network of credit and banking institutions both on its territory and abroad.

In addition, the reserve currency should differ by its convertibility, stable stable rate and favorable legal regime for use in international transactions.

The global financial crisis has clearly demonstrated that it is hard for the dollar alone to cope with the functions that the reserve currency should perform. In the United States, the macroeconomic situation is far from ideal, in particular, it concerns the threat of a fiscal cliff, a constantly growing national debt (according to forecasts in 2014 it will be $ 18532 billion), a tense employment situation.

All this suggests that in the near future a new currency order will come into existence, in which the concept of "main reserve currency" will disappear, and a basket of several reserve currencies will most likely replace it.

In this regard, there are more and more assumptions about the future prospects of the Russian ruble, which may well turn into a reserve currency of regional scale.

In principle, this is quite realistic, such chances do exist. However, this requires that in Russia a full-fledged government bond market is formed . While it is absent, it is pointless to talk about any status, since this condition is the key for the ruble to become one of the reserve currencies.

The second condition is low inflation and stability. In the long term, these goals can be achieved by 2014-2018. Current realities are such that Russians are reluctant to keep their savings in investment institutions or in banks. At the same time, the euro or the dollar is mostly used for storage. It is unlikely that in the near future the situation will change radically.

It is necessary that the government in every possible way contribute to the development of exchange trade, the free conversion of the ruble and the sale of Russian bonds on international markets. The protection of property rights in Russia, the development of the stock and financial markets, corporate legislation and a stable banking system - that can significantly help the ruble become a new reserve currency. If the government, moreover, makes every effort to improve the investment climate, there will be a lot of investors interested in using the Russian ruble as a reserve reserve currency.