My understanding is that a reserve currency requires fluid markets and a stable, reliable, metrics-based currency policy. It's why the Fed is so stubborn about its relatively simple policy goals: 2% inflation and low unemployment.
China appears to be attempting to reproduce what the USD was before it was free floating.
USD is currently backed by debt and nominally military might. If the US defaults then all of the US bonds held by foreign banks become worthless. That is an enormous risk which is why countries have been divesting from US bonds. If USD was still gold, as it was before 1913, if you hold your money it cannot be made worthless by a third party. After 1913 USD became gold backed bills with partial reserve. It is why USD became the global reserve currency. But, reserve requirements were reduced and more paper was produced. In 1971 Nixon removed the convertibility of paper bills to gold metal effectively stealing the gold of any nation that asked the US to hold it.
One of my favorite bits of currency trivia is that a $20 double gold eagle coin used in circulation prior to 1933 had a gold content of 0.9675 troy ounces. Twenty dollars in your hand was literally nearly an ounce of gold.
You seem to suggest that people should worry about a default claiming if we had still had a gold backed currency the risk would go away ... "if you hold your money it cannot be made worthless by a third party" ... but it can be made worthless by a government any time that government chooses.
The government (having defaulted on gold-backed debt) could simply refuse to convert the paper of the debt to gold (sure, that would be bad, but hey, they've already chosen to default, so not much worse ...)
Many people doubt that returning to gold and silver coinage is possible. Going to gold backed currency is a step in the right direction.
A full reserve requirement might work for paper currency. But the only way the plebs that are stuck with paper can truly secure their wealth is to use metal the same as countries do.
1. old situation: currency backed by full (gold) reserve
2. actual political decision: currency no longer backed by full reserve
3. result: currency no longer backed by full reserve
1. possible political decision: return to currency backed by full (gold) reserve
2. possible political decision: currency no longer backed by full reserve
3. result: currency no longer backed by full reserve
If no government in the history of the world had ever done this, then arguing for a full-reserve backed currency might have a bit more weight. But they have, and it really has done.
Regardless, I get your point that political decisions ruined it. It is clear that government cannot be trusted to maintain a constant unit of measure that money should be. So, would you agree to an amendment to separate economy and state? Require government to produce coins of known weight and purity and that is it. If they want more money to spend they will have to extract it as taxes.
No.
https://bmg-group.com/russia-confirms-brics-will-create-gold...
> Pretty straightforward really. You combine Brazil's history of monetary stability, with Russia's respect for property rights, India's domestic tranquility, China's financial transparency, and South Africa's investment opportunities - and hey presto, you've got a new global money
* https://twitter.com/davidfrum/status/1665053372402081792
Of course more countries may enrol in the system, but that dilutes the influence of the five namesake nations of BRICS.
But then you have to choose an actual currency(s) to do transactions in, so will you trust them to be stable? Or perhaps go with a 'theoretical' currency likes Keynes' bancor?
* https://en.wikipedia.org/wiki/Bancor
* https://en.wikipedia.org/wiki/World_currency#Single_world_cu...
As for gold-based currencies, see perhaps "Why the Gold Standard Is the World's Worst Economic Idea, in 2 Charts":
* http://archive.is/https://www.theatlantic.com/business/archi...
The entire concept of marking coins with trustworthy seals was exactly to basically invent fiat currency as risk mitigation: coins bearing the seal would be honored, and from that it was a short hop to "what if I just presented an IOU with the seal of the local gold merchant?"
1. most physical paper has a relatively short life, so one would not expect it to last as long as metal tokens
2. paper was only available in much of the world several thousand years after the first currencies began, so it's not suprising that we have little record of paper money from very old civilizations.
3. the idea that there was no cheating by fudging numbers before paper currency is completely ahistorical. The nature and ease of the fudging may have changed, but the fudging itself existed long, long before paper currencies became common.