Lax monetary policy of the Federal Reserve brings decline of the dollar, as well as forcing countries with developing economies such as China, to form a new monetary hierarchy, says in report the British bank HSBC.

Dollar risks losing status as a world reserve currency, warns in a new report by HSBC. Situation of the dollar is painfully reminiscent of the pound after the First World War, said the head of foreign exchange manager of the bank, David Bloom, which refers to the Daily Telegraph. “The whole picture of risk-reward for emerging market currencies has changed. It is not so much that they have risen to our standards, it is that we have fallen to theirs. It used to be that sovereign risk was mainly an emerging market issue but the events of the last year have shown that this is no longer the case. Look at the UK – debt is racing up to 100% of GDP, ” said Bloom.
Meanwhile, China and other emerging economies in Asia, had reached the point where they can no longer be artificially low rates for their currencies to maintain export because it creates chaos in their own economy, maintaining inflation of the bubbles, the newspaper said. “Mercantilist” mentality that prevailed in Asia in the past few decades looses its position because of inflationary expectations.
This problem was already evident at the last stage of the credit boom, but the financial crisis at the time smoothed the effect. But this pressure will increase as developing countries will maintain solid growth, leaving the U.S. behind.
Thus, the newspaper says, we are witnessing an epochal decline in economic power and wealth of the old G10 bloc of rich countries against the backdrop of growth in the new world.
According to Bloom, the regional currencies will become a kind of anchor for smaller trading partners in developing countries, and the role of the U.S. would assume China, Brazil or South Africa.