March 31, 2011 Reading Time: < 1 minute

“A top Chinese economist warned that the world has fallen into a “dollar trap,” as U.S. trading partners lack an alternative to the greenback and can’t prevent the Federal Reserve from printing more money.

The arrangement means big holders of dollars – such as China, which holds some $3 trillion of foreign exchange reserves, mostly in dollars – must sit idly by and watch as the value of their holdings erode. They can’t lightly diversify out of dollars at the risk of accelerating the erosion.” Read more

“China Warns of ‘Dollar Trap'” 
Colin Barr 
Fortune, March 30, 2011. 

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