Oct. 12 (Bloomberg) -- Central banks flush with record reserves are increasingly snubbing dollars in favor of euros and yen, further pressuring the greenback after its biggest two- quarter rout in almost two decades . . .

“Global central banks are getting more serious about diversification, whereas in the past they used to just talk about it,” said Steven Englander, a former Federal Reserve researcher who is now the chief U.S. currency strategist at Barclays in New York. “It looks like they are really backing away from the dollar.”

Originally posted by infinite
The question, of the Dollar "breaking point", will be highlighted if there is a significant move to diversify oil.

Both oil exchanges, London and New York, trade in Dollars. The Euro will only become the global reserve if the United Kingdom joins the currency - which is highly unlikely currently.

As of November 2008, with more than €751 billion in circulation, the euro is the currency with the highest combined value of cash in circulation in the world, having surpassed the U.S. dollar.

But serious people are troubled. Robert Zoellick, president of the World Bank, said last week that "the US would be mistaken to take for granted the dollar's place as the world's predominant reserve currency".

And even a political sympathiser of Obama's has warned that America could be about to suffer "a punishing dollar crisis".

Zoellick said that although the global economy may be pulling out of the worst recession in six decades, risks remain high, including from government plans to withdraw economic stimulus and debt rollovers that could be combined with a rise in interest rates.

"We have no guarantee that the private sector, the main producer of jobs, will kick in. It is still not clear who will replace the US consumer as a source of demand," the former US trade representative said.