Sep 162015
 
2015-09-10 06:32 PM  Author Evander Smart Read the complete article At Contelegraph.com Westerners are funny people. Westerners have never experienced currency devaluation, EVER! “The Almighty Dollar” has ruled the world their entire lives. Telling a Westerner there might be a problem with the U.S. Dollar is like saying the sun might not show up tomorrow morning. It has never happened; could never happen! Well, it turns out the U.S. Dollar isn’t as “almighty” as it used to be, and some new global currency might be ready to shock the world, literally. Welcome to how the rest of the world sees the United States. In effect, America is seen as an international thug, a global bully with nuclear warheads, and an unlimited credit card to make as many as they want and put them wherever they want. Nothing lasts forever Times have changed, and the shoe is on the other foot. America — land of perpetual warfare — is swimming in US$18 trillion in national debt. The U.S. owes almost US$3 trillion to just Japan and China alone as it prints about US$696 million per day. According to the International Monetary Fund (IMF) or the world’s loan shark, China has even passed the U.S. as the world’s largest economy. A large part of having a global reserve currency is your currency becomes global in demand. It is the international baseline currency for all trade. Countries are agreeing, in principle, to trade with your currency being the means to an end. Over the last several years, many countries, especially in East Asia, have stopped using the U.S. Dollar for trading purposes. These are called “bilateral trade agreements,” and they’re becoming as popular as cat videos on YouTube. So what are other countries starting to use instead? The Chinese Yuan, also known as the Renminbi. Countries are trading so much Yuan that it has become thesecond most used currency in the world, passing the Euro in 2013 whereas ten years ago, it wasn’t even considered tradable. That’s how powerful China has become as a global trade partner within the last decade. And the IMF along with the World Bank have taken note and are rumored to be ready to do something about it. Read the complete article HERE Share this:FacebookLinkedInTwitterGoogleTumblrPinterestReddit (more…)
Feb 232011
 
China Takes Tentative Steps Towards Global Currency Currencies / China Currency YuanFeb 13, 2011 – 06:05 PM By: Trader_Mark The move of the yuan as a global currency is a very important one in the long run, as it will have potentially dramatic effects on the U.S. dollar as the sole reserve currency but for now things are going along at a snail pace.  In the interim, the Chinese currency is essentially pegged to the U.S. dollar (for better or worse).   Until the % of growth in China from exports is reduced, and they are far more reliant on internal consumption I don’t see this loose peg changing anytime soon. Longer term, with 3 ugly ducklings (euro, dollar, yen) dominating the world’s FX markets, the cart will eventually be turned over when a country (or region) coming from a position of fiscal strength rather than weakness enters the fray.  Via NYT: Now that it has passed Japan to become the world’s second-largest economy after the United States, China is considering the next step as a world power: making its money a global currency.  No one expects that to happen immediately. And even the Chinese government is wary of making some of the free-market moves that would enable the renminbi to take its place alongside the dollar, euro and Japanese yen as a fully convertible reserve currency. Still, over the last year Beijing has begun to gradually loosen its tight currency controls. For the first time, for example, American companies like McDonald’s and Caterpillar have been allowed to finance their China projects by selling renminbi-denominated bonds in Hong Kong. Meanwhile, in Russia, Vietnam and Thailand, some cross-border trades with China can now be settled in renminbi, so that trading partners do not have to convert in and out of dollars. One pilot program lets Russian companies like Sportmaster, a retail chain based in Moscow, buy or sell goods using Chinese currency. And in New York, the Chinese government has permitted an overseas branch of Bank of China to accept deposits in renminbi. That enables depositors outside China to bet on a currency that is widely expected to appreciate against the dollar over the next few years. “This is all encouraging the internationalization of the renminbi,” Kelvin Lau, an economist at Standard Chartered Bank who is based in Hong Kong, said of Beijing’s recent moves. “They want to make the Chinese currency (more…)