Countries including France and Russia at the G8 summit in Italy are suggesting the U.S. greenback should be replaced as the main global reserve currency. (Michel Euler/Associated Press)A top economist at one of Canada's biggest banks says it's unlikely the U.S. dollar will be ditched as the lead currency used in international trade.

Richard Kelly, senior economist with TD Bank Financial Group, says he doubts the sabre-rattling world leaders who want the greenback replaced as the main global reserve currency will get their wish.

The world's richest countries opened the G8 summit Wednesday in Italy. Some — including Russia and France, as well as non-member countries China and India — advocate the change because of concerns over the deteriorating U.S. economy.

According to the International Monetary Fund, the American dollar now accounts for about two-thirds of all global reserve currency. The Euro is second, making up about one quarter of the world's cash reserve.

China in particular wants the issue raised when G-8 leaders gather in Italy for their annual summit this week.

"I think there is a lot of concern [about the state of the U.S. economy]," Kelly told CBC News. "But I'm not convinced there is anything you can do about it in the near term, to set up a new system."

Last Friday, federal Finance Minister Jim Flaherty defended the continued use of the greenback in international trade.

"In the midst of what is still a significant global recession, it's important that we aim for stability, and stability has been based on the U.S. dollar as the global currency," Reuters reported Flaherty as saying.

Low U.S. dollar helps Canadian exports

Kelly says it is probably in the best interest of Canada's exporters, especially those which sell oil and other raw materials on the international market, to continue trading in U.S. dollars, especially as the currency's value remains in a slump due to the country's recession woes.

"To the extent the depreciation of the dollar is because of domestic issues, it is beneficial [to Canadian exports] in the short run," Kelly said.

That is because a lower U.S. dollar makes it cheaper for other countries to import Canadian goods, he said. Commodities including oil are among Canada's biggest-selling exports.

Farrokh Zandi, an economics professor at York University's Schulich School of Business, said that even if there were movement away from the U.S.-dollar standard by other countries, Canada would likely buck the trend and continue trading with its southern neighbour in U.S. dollars.

'An alternative currency replacing the U.S. dollar would mean a decline in wealth for Canada.'—Farrokh Zandi, Schulich School of Business

"With the two economies being intertwined the way they are, it is not implausible Canada would retain the U.S. dollar as its reserve currency, despite what happens in the rest of the world," Zandi told CBC News.

Zandi says even if emerging economic powers such as China and India succeed in having the U.S. dollar supplanted as the dominant global currency for trade, it wouldn't happen overnight.

But, he warns if it ever does happen, Canadians could feel some negative side effects.

"The value of the U.S. dollar would drop, and so interest rates would go up, including in Canada," Zandi said.

"An alternative currency replacing the U.S. dollar would mean a decline in wealth for Canada, because if the U.S. dollar declines, the Canadian dollar would also decline," he said.

Canada's largest trading partner remains the United States.

Industry Canada says exporters sent more than $91 billion, or about three quarters of all exports, to the U.S., in the first four months of 2009.

Canada linked tightly to U.S. economy

Kelly predicts that the strong trade relationship between Canada and the U.S. won't change, no matter what currency the world uses for trade.

"The Canadian economy will always remain very tied to the U.S. economy. The benefit is that we are tied to the U.S., and the global reserve currency is the U.S. dollar, " he said.

Some economists suggest the slumping U.S. dollar will prove beneficial to Canadian exporters in the short run. (Bullit Marquez/Associated Press)But Kelly warns that if China and others leading the charge to dump the dollar were to succeed, it could complicate Canada's trade development elsewhere.

"It would make it more complex for Canada to build up its trade position in the rest of the world."

Many countries, including China, have stockpiled billions of U.S. dollars, partly as a way to boost the value of their own domestic currency.

Some observers believe China and others are now worried over a deep, long-term slump in the value of the U.S. dollar, because of mounting government deficits, the global recession and the U.S. Central Reserve Bank's accelerated printing of money.