The United States is effectively printing cheap dollars as it implements an ultra-loose policy to spur its flagging economy, setting the stage for "a world credit war", a Chinese rating agency said on Friday.

The Beijing-based Dagong Global Credit Rating, a relative newcomer in the sovereign debt rating realm, said in its 2011 Sovereign Credit Risk Outlook that quantitative easing by the U.S. Federal Reserve has "eroded the legitimacy of the global monetary system that takes the dollar as the key reserve currency."

The policy easing was also "bringing the U.S. dollar's credit-worthiness to a vulnerable position," it said.