Mar 122015
  China-IMF talks underway to endorse yuan as global reserve currency  March 12, 2015, 12:12 pm   Including the yuan in the SDR basket would aid China’s attempts to diminish the dollar’s dominance in global trade and finance [Xinhua] China is pushing for the International Monetary Fund to endorse the Chinese yuan as a global reserve currency alongside the dollar and euro. A senior Chinese central bank official said Thursday that the country is “actively communicating” with the IMF on the possibility of including the yuan, or RMB, in the basket of the Special Drawing Rights (SDRs). Including the yuan in the SDR system would allow the IMF to recognize the ascent of the world’s second-biggest economy while aiding China’s attempts to diminish the dollar’s dominance in global trade and finance. “We hope the IMF can fully take into account the progress of RMB internationalization, to include RMB into the basket underlining the SDR in foreseeable, near future,” said Yi Gang, vice governor of the People’s Bank of China. However, China will be patient until conditions are ripe, Yi said at a press conference on the sidelines of the ongoing annual parliamentary session. In late 2015, the IMF will conduct its next twice-a-decade review of the basket of currencies its members can count toward their official reserves. SDRs are international foreign exchange reserve assets. Allocated to nations by the IMF, an SDR represents a claim to foreign currencies for which it may be exchanged in times of need. Although denominated in US dollars, the nominal value of an SDR is derived from a basket of currencies, with, specifically, a fixed amount of Japanese yen, US dollars, British pounds and euros, without RMB. China would need to satisfy the Washington-based lender’s economic benchmarks and get the support of most of the other 187 member countries. To become a currency included in the SDR basket, the trade volume of goods and services behind that currency will be evaluated, the Chinese Central Bank official explained on Thursday, stressing that RMB has no problem in this regard. But he said views are divided on whether the RMB is a freely usable currency. “No matter whether and when the RMB will be included in the SDR basket, China will push on with its financial sector reform and opening-up,” Yi said. The yuan became the world’s No. 2 currency for trade finance globally in 2013, and overtook the Canadian (more…)
Dec 312014
On Sept. 11, Pastor Lindsey Williams, former minister to the global oil companies during the building of the Alaskan pipeline, announced the most significant event to affect the U.S. dollar since its inception as a currency. For the first time since the 1970’s, when Henry Kissenger forged a trade agreement with the Royal house of Saud to sell oil using only U.S. dollars, China announced its intention to bypass the dollar for global oil customers and began selling the commodity using their own currency. Lindsey Williams: “The most significant day in the history of the American dollar, since its inception, happened on Thursday, Sept. 6. On that day, something took place that is going to affect your life, your family, your dinner table more than you can possibly imagine.” “On Thursday, Sept. 6… just a few days ago, China made the official announcement. China said on that day, our banking system is ready, all of our communication systems are ready, all of the transfer systems are ready, and as of that day, Thursday, Sept. 6, any nation in the world that wishes from this point on, to buy, sell, or trade crude oil, can do using the Chinese currency, not the American dollar. – Interview with Natty Bumpo on the Just Measures Radio network, Sept. 11 This announcement by China is one of the most significant sea changes in the global economic and monetary systems, but was barely reported on due to its announcement taking place during the Democratic convention last week. The ramifications of this new action are vast, and could very well be the catalyst that brings down the dollar as the global reserve currency, and change the entire landscape of how the world purchases energy. Ironically, since Sept. 6, the U.S. dollar has fallen from 81.467 on the index to today’s price of 79.73. While analysts will focus on actions taking place in the Eurozone, and expected easing signals from the Federal Reserve on Thursday regarding the fall of the dollar, it is not coincidence that the dollar began to lose strength on the very day of China’s announcement. Since China is not a natural oil producing nation, the question most people will ask is how will the Asian economic power get enough oil to affect dollar hegemony? That question was also answered by Lindsey Williams when he pointed out a new trade agreement that was signed (more…)
Dec 132013
Chinese yuan dominates global bitcoin trade Tuesday, 03 December, 2013, 1:10pm Business›Banking & Finance CURRENCIES Patrick Boehler With the digital currency’s value rising sharply, 58 per cent of day’s global volume done in yuan as non-professionals wade into new market The yuan accounts for most of the trade in bitcoins as trading of the unregulated digital currency soars in the world’s second-largest economy. By noon yesterday, about 58 per cent of the global trade during the preceding 24 hours occurred on exchanges trading the mainland currency, according to open-source research project BitcoinAverage [1]. A Bitcoin logo is seen at the window of a restaurant that accepts Bitcoin, a form of digital currency, as payment in San Francisco. Photo: Reuters[2] According to the aggregator of market data, China’s trading volume in the period reached 827 million yuan (HK$1 billion). Trades in US dollars account for roughly 37 per cent of global volume. Trades in euros account for slightly less than 2 per cent. No other currency accounts for more than one per cent of trade, according to BitcoinAverage. Fortunes have already been made in China via the virtual currency. The value of a bitcoin in China soared 861.02 per cent from 844.75 yuan on September 3, the earliest data available on BitcoinAverage, to its peak value last Friday of 7273.47 yuan. The virtual currency was trading at between 6,300 and 6,400 yuan on Tuesday morning on major Chinese exchanges. Unlike with previous virtual currencies, China’s deputy central bank governor Yi Gang said last month that bitcoins could be freely traded, although the government would not accept them as currency.  A provincial subsidiary of state-run China Telecom even said it would accept payment in the virtual currency. Jiangsu Telecom said last week it would accept the virtual currency for pre-orders of a new Samsung phone[3]. “China is driving the volume predominantly for two reasons: speculation and mining,” said Zennon Kapron, managing director fo the Shanghai-based financial advisory firm Kapronasia. “Returns on Bitcoin this year have surpassed real estate which previously was the best performing mainstream asset class in China, which has naturally attracted more attention and further driven the price up.” Kapron said it was natural for China, the world’s biggest manufacturer of bitcoin mining equipment, to play a large role in the trade. Li Lin, head of the Beijing-based Huobi trading platform, told the Beijing Morning Post last week that the majority of new bitcoin (more…)
Oct 142013
Chinese yuan sets record high versus U.S. dollar SHANGHAI — Reuters Published Monday, Oct. 14 2013, 1:27 PM EDT Last updated Monday, Oct. 14 2013, 1:29 PM EDT The Chinese yuan set a new peak against the dollar on Monday afternoon after the central bank guided the currency up through a record high guidance rate in the morning, as traders shrugged off negative export data. The yuan changed hands at 6.1088 per dollar at 4:08 p.m. local time, its strongest rate since Aug. 16, when it traded at 6.1090. It backed off briefly, then firmed again to 6.1073 a few minutes later. The People’s Bank of China fixed the yuan midpoint – the rate from which the traded rate is allowed to diverge by 1 per cent in either direction – at 6.1406 per dollar at the market open, the highest it has been since China created its domestic foreign exchange market in 1994. The setting followed disappointing export data, which showed a year-on-year decline of 0.3 per cent in September, confounding market expectations for a rise of 6 per cent and marking the worst performance in three months. Some have expressed concern that the strength of the yuan is damaging China’s export competitiveness even as the global economic recovery remains in doubt. But traders and economists argued that September’s export figures are not as negative as they seem given distorted base effects caused by rampant false invoicing in the service of currency speculation last year. Share this:FacebookLinkedInTwitterGoogleTumblrPinterestReddit (more…)
May 012011
Default Is Absolutely Impossible While The Dollar Is The Global Currency STRATFOR | Apr. 28, 2011, 11:39 AM Read more: [Editor’s Note: The original article is formated with the video at the end.] The truth about the Chinese Yuan! This video is unlisted. Only those with the link can see it. Vice President of Analysis Peter Zeihan explains how the U.S. dollar’s position as the global reserve currency makes default impossible and why the euro and yuan cannot currently assume the role.   Ultimately a credit ratings agency’s assessments of a country are based in how sustainable the country’s budgeting processes are. Now the United States — it’s not that great; between the Bush administration and the current Obama administration, American finances are certainly on an unsustainable course. Tax revenues are relatively high right now, but with the baby boomers about to retire, they’ll be taking their tax income with them. Spending is high and is showing few signs of being brought under control either by this administration or by Congress. There aren’t a lot of options for rationalizing the budget: You could drastically increase the retirement age; you could do away with some sort of social benefits, such as social security; you could sharply raise taxes. All of these are political non-starters; they’re all political suicide. So by the books, yes, the United States deserves a downgrade — maybe more than one. But ultimately that’s irrelevant. In the case of United States, default is absolutely impossible. All U.S. government debt is denominated in U.S. dollar assets. The U.S. dollar is the global currency. The U.S. Federal Reserve controls U.S. dollar policy. So long as this is the case, it’s absolutely impossible to default on the debt. Luckily for the Americans, there is absolutely no currency out there that is within a generation of replacing the United States dollar as the global currency. Let’s examine why that is the case. First, let’s look at the euro. The euro is certainly the currency that is the closest to displacing the U.S. dollar as the global currency. But if you look at the events of the last couple of years, you’ll notice that the Europeans have been in a nonstop financial crisis, honestly, since before the global recession even began back in mid-2008. Nearly all of the Continent’s banks are not only unstable but they’ve now become interlinked to the currency and (more…)
Apr 022011
G20 leaders have moved towards agreeing that China’s currency should have a wider role in global finance. The G20 is to study whether to include the Chinese yuan within the basket of currencies that make up the IMF’s Special Drawing Right. The Special Drawing Right, or SDR, is a quasi currency used within the IMF by its member countries. Some economists believe the SDR could one day become a global reserve currency alongside the US dollar. Evolution Speaking at the G20 summit in Nanjing, French President Nicolas Sarkozy suggested that given the importance of emerging economies such as China to global growth, their currencies should be added to the SDR basket. “Without rules and supervision, the world runs the risk of being condemned to increasingly serious and severe crises,” said President Sarkozy. “It is clear that we must evolve toward a more flexible exchange rate system that will allow us to withstand shocks,” he added. His comments were backed by US Treasury Secretary Timothy Geithner who said he supported a change to SDR composition. “Over time, we believe that currencies of large economies heavily used in international trade and financial transactions should become a part of the SDR basket,” he said. Currency control However, Mr Geithner said that for this to happen, governments would have to loosen their control of currencies. “To achieve this objective, the concerned countries should have flexible exchange rate systems, independent central banks and permit the free movement of capital flows,” he said. Mr Geithner said tight control of currency pricing by some countries was hurting the global economy. French finance minister Christine Lagarde also suggested that any move to include the yuan within the SDR basket would involve conditions being placed upon the Chinese authorities. “We discussed the conditions that apply to belonging to the SDR basket and in particular we focused on the convertability and flexibility of the currency and the relative independence of the central bank,” she said. Yuan appreciation The US and other developed nations have been critical of China’s exchange rate policy. There have been repeated calls for China to let the value of the yuan – or renminbi (RMB) – appreciate against the US dollar. It has been accused of keeping the value of the yuan artificially low in order to help its exporters. Beijing has maintained that a sudden appreciation of its currency will be detrimental not only for (more…)