ADVERTISEMENT

Soros says: Euro cannot replace Dollar as top currency

Analysis

The euro cannot replace the dollar as the world’s main reserve currency, and a system of two reserve currencies would be unstable, billionaire investor George Soros said on Thursday.

“I don’t think the euro can replace the dollar, and a system with two major reserve currencies is not a stable system,” Soros said. The euro has surged to record highs against the US currency as the US economy is seen going into recession. “What we have now is a period of instability and heightened uncertainty,” Soros said.

He was in Brussels to promote his latest book, ‘The New Paradigm for Financial Markets: The Credit Crisis of 2008 and What It Means’. It was still a time of wealth destruction, Soros said, and he advised investors to find ways to preserve capital until it was clear how the authorities and markets would respond. He said the main lesson from the current financial market turmoil was the need to control credit and not just money supply, and added that markets were not yet out of trouble. “There is a commodities bubble still in the growth phase while other bubbles are being deflated,” Soros said.

Soros said a key remedy to the current crisis of confidence among banks would be to move trading in complex securitized products such as collateralized debt obligations and swaps onto exchanges to boost transparency in counterparty risk. “It would be desirable to regulate it. You need to have transparency on excessive use of leverage by participants. The root of the trouble is excessive leverage based on failure to recognize the uncertainty inherent in the system,” he said. Soros said hedge funds needed to be regulated like other market participants, with banks having better information about the amount of leverage hedge funds used. “Banks need to have more reserves when lending to hedge funds,” Soros added. (Reuters)

ADVERTISEMENT

Kopint-Tárki raises 2021 GDP forecast to 6.8% Analysis

Kopint-Tárki raises 2021 GDP forecast to 6.8%

Parliament approves amendment to Competition Act Parliament

Parliament approves amendment to Competition Act

New CEO announced at Codic Hungary Appointments

New CEO announced at Codic Hungary

Budapest bike-sharing scheme boasts record ridership City

Budapest bike-sharing scheme boasts record ridership

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.