Would this reduce volatility, or would it be even greater, as players switch among currencies, particularly in the transition phase as the currency composition of reserves is re-weighted?
Of course, a shift to a multi-currency system requires that the privilege of incumbency of the US dollar be removed, that the sovereign debt weaknesses in the euro area be resolved, and that the renminbi develop its full international potential. Now the suggested reforms pose many new questions. Let me focus on two in particular.