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I think the Chinese positioned themselves brilliantly for this to happen. They did it by making treaties with a number of countries for mutual exchange. For example they have a deal with Russia that the oil they buy will be exchanged between the yuan and the ruble. They have done similar things with a number of countries, so when they go to the IMF, they can rightly say “look it is already happening with the following countries, so why not make it official.”

GS is quite right that this has been the plan for a long time. If I’m not mistaken both China and Russia have been quietly dumping their US dollar holdings. The IMF will prop up the dollar for a while to avoid any massive disruption in the world economies. The next steps will be slow and gradual until one day we will wake up and realize that the dollar is no longer needed as reserve currency.

It is also no secret that the China, Russia, and India are buying gold at an incredible pace. So we may actually see a gold backed currency coming from them.