It seems like some in Asia are a bit worried that so much of the world's wealth is denominated in the currency of the world's largest debtor. Cynic's Delight highlights their concerns well in a recent post.
"Chalongphob Sussangkarn, president of the Thailand Development Research Institute, a Bangkok based think-tank, said, "It is quite hard to understand why the world's largest debtor (the United States) is the one that controls the world's financial system. We (East Asia) always monitor what the US Federal Reserve says about interest rate movements. (East Asian) creditors should be the ones who determine the world's fate."
Frankly, the United States' Asian creditors should be worried. The Fed has made it clear that its preferred solution to the US trade deficit is a big dollar depreciation. And the required depreciation could be large indeed. See Rogoff and Obstfeld.
Yu Yongding is always worth listening to as well - and while his voice is only one of many that matter in China, the fact that he think China already has too many reserves is significant.
During the seminar, Yu Yongding, president of the Institute of World Economics and Politics in China, said that even if the dollar does not devalue in a big way, East Asia still needs to think about how to deal with their already excessive foreign exchange reserves.
I don't always agree with Ronald McKinnon. But there is a glimmer of truth in his argument about "conflicted virtue." The fact that most of Chinese and Japanese savings held abroad are denominated in dollars rather than yuan or yen is not ideal from a Chinese or Japanese point of view.
Asian bankers dissing the dollar. Unocal. PetroKaz. China clearly would rather make a long-term bet on oil than on the dollar, if it can. After all, the US can print dollars, but there is only so much oil ...
On the surface of the global financial system, though, all is calm ... perhaps even too calm.