The wishes of the BRIC nations have finally been fulfilled.

(Bloomberg) -- The International Monetary Fund’s board of directors approved the issuance of bonds to the lender’s 186 members for the first time as it seeks additional sources of money to lend during the global recession.

The board made the move in a vote today and did not place a limit on the note sales, Andrew Tweedie, the Washington-based IMF’s finance chief, said on a conference call with reporters. The bonds are part of a wider effort to seek $500 billion in new funding as the lender helps countries from Iceland to Pakistan combat the global financial crisis.

That's an interesting spin - that this is being done to help distressed nations. In fact, this idea has been pushed by the BRIC nations for months for one reason and one reason alone - to diversify their assets out of dollars.

China’s government has said it will buy $50 billion in notes. Russia and Brazil last month said they would each buy $10 billion of bonds from the IMF. India has also indicated it would contribute to an IMF bond program. The four nations make up the so-called BRICs.

“This is a victory for the BRICs, particularly China,” said Claudio Loser, the former director of the IMF’s Western Hemisphere department. “Because they will be investing in the fund they will have, directly or indirectly, some say in the governance of the fund that goes beyond their quota.”
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The notes will be denominated in Special Drawing Rights, or SDRs, which represent a basket of currencies consisting of the U.S. dollar, the euro, the yen and the British pound. Note sales denominated in SDRs would be paid interest on a quarterly basis, the IMF said.

Chinese officials have sought a greater role over time for SDRs in an effort to reduce the U.S. dollar’s dominance in the global economy.
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China’s central bank last month renewed its call for a new global currency and said the IMF should manage more of members’ foreign-exchange reserves, triggering a decline in the U.S. dollar. Lipsky said on June 6 it’s possible some day to take the “revolutionary” step of making SDRs a reserve currency.

What this amounts to is another step along the road towards the end of dollar hegemony.
Eventually the debtors (America and Britain) will have to give the creditors (BRIC nations, OPEC, and Japan) what they want.

On a related note, Obama recently pushed a bill through the House authorizing the IMF to sell 400 tonnes of gold. Obama did this by tying it to a defense funding bill.
Why take this unusual step? And what does this have to do with China? Because China and India, in their rush to diversify out of dollars, wants all of the IMF gold, not just the 400 tonnes.

India and China may press for the sale of the entire gold reserves of the International Monetary Fund (IMF) to raise money for the least developed countries.

The IMF holds 103.4 million ounces (3,217 tonnes) of gold that, if sold, can fetch about $100 billion.

A draft paper exchanged between New Delhi and Beijing proposes that the gold be sold in bullion markets over a period of two to three years. The money thus raised must be used in tackling poverty in the poorest nations.

“We have been discussing with China a common position on the subject,” a senior finance ministry official told Financial Chronicle.

“We are working on a more ambitious proposal of selling the entire gold as it is an idle asset with the IMF,” said the official.

Right. It's to raise money for tackling poverty. And I have a bridge to sell you.