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Chinese Yuan Surpasses Euro, Becomes Second Most Used Currency In Trade Finance

Tyler Durden's picture




 

Slowly but surely the Chinese currency is catching up to the world's reserve and moments ago, according to SWIFT, the Yuan just surpassed the Euro in trade (remember trade: that's how countries once upon a time would generate capital flows in a time when central banks weren't there to literally print domestic funding needs) finance usage leaving just the USD in front.

  • YUAN OVERTAKES EURO IN TRADE FINANCE USAGE: SWIFT
  • YUAN IS SECOND MOST-USED CURRENCY IN TRADE FINANCE: SWIFT

More from Bloomberg:

  • Chinese currency had 8.66% share in letters of credit and collections, or trade finance, in Oct., Society for Worldwide Interbank Financial Telecommunications says in statement today.
  • Euro’s shr in trade finance was 6.64% in Oct.
  • Top 5 countries using yuan for trade finance in Oct. were China, Hong Kong, Singapore, Germany and Australia
  • Yuan mkt shr in global payments was 0.84% in Oct. vs. 0.86% in Sept.
  • Yuan payments value rose 1.5% in Oct. vs. 4.6% growth for all currencies: Swift

And so while the "developed" world is busy crushing its fiat through trillions in annual currency dilution and debasement in an attempt to make its exports cheaper and outtrade its peers through beggar thy neighbor policies (not to mention inflate away its debt), the leader of the "emerging" world, China, is doing just that.

 

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Mon, 12/02/2013 - 23:10 | 4208790 donpaulo
donpaulo's picture

welcome to our new overlords. RMB trending upwards ? yay

Mon, 12/02/2013 - 23:37 | 4208896 Crash Overide
Crash Overide's picture

China is printing a shit load of currency just like the FED, but China exports paper and imports gold, all the FED is doing it printing and buying it's own debt back.

We will see where everyone stands when the paper settles.

Tue, 12/03/2013 - 04:26 | 4209343 Popo
Popo's picture

Unfortunately at the end of this road lies only one equation and it is most definitely not who has the most shiny metal. It's who spent the most on arms. That is of course, where this is heading.

Tue, 12/03/2013 - 09:15 | 4209558 falak pema
falak pema's picture

Spending on Arms is not the key if you can't hold the ground for which you spent it; as Pax Americana (or its surrogates) in ME as elsewhere cannot clearly do, proof now visible since Nam years and what has followed in Iraq/Pak/Afgh/Syria/Egypt/Libya before our very eyes.

One thing the world has not quite appreciated on the military Strategy front is that Nguyen Giap will be remembered as the greatest militarist counter strategist of the Second Half of the 20 th century.

He defeated both the French and the US; his example will run rivers of Oligarchy financed blood if the third world learns to apply his tactics efficiently, which Iraq showed they hadn't learned yet.

But its a law of diminishing returns for Pax Amercana if they go down the military road anywhere outside USA to maintain hegemony; with or without drones. The drone argument is just a two edged sword.

Tue, 12/03/2013 - 11:21 | 4209997 Newsboy
Newsboy's picture

Yes, RIP Cousin Giap.

There is the matter of controlling the vital trade routes, as well as that of holding the ground.

Food and fuel control people and nations, according to Sith Lord Kissinger.

Water controls life itself, dunnit'?

Tue, 12/03/2013 - 09:12 | 4209560 Jimmy Carter wa...
Jimmy Carter was right's picture

China and Russia are just waiting in the wings for the USA to fuckup bigtime. Then they will announce some kind of gold/basket/commodity backed currency.  They will wait and wait patiently.  Don't be surprised if 4000 tons magically appears in either China or Russia.  They will get stiffed on their US treasuries and no one will buy their Wal-Marx crap anymore in the US, so it is  a huge gamble, which they will have to take.

What China needs desperately now is water. Look for big water projects from Russia or Tibet.

Mon, 12/02/2013 - 23:13 | 4208798 infiniti
infiniti's picture

"And so while the "developed" world is busy crushing its fiat through trillions in annual currency dilution and debasement"

Surely ZH has reviewed China's M1 and M2 indices, nobody dilutes and debases like China.

Mon, 12/02/2013 - 23:16 | 4208817 HulkHogan
HulkHogan's picture

"the leader of the "emerging" world, China, is doing just that."

Mon, 12/02/2013 - 23:17 | 4208815 Yen Cross
Yen Cross's picture

   Have ,has anyone been to China lately?  China can unload FRNs'.  ASIA returns to the dark ages...

 

Mon, 12/02/2013 - 23:29 | 4208870 PP
PP's picture

PBOC is the greatest hedge fund in human history, not Fed

Mon, 12/02/2013 - 23:16 | 4208818 max2205
max2205's picture

I Yuan some

Tue, 12/03/2013 - 00:06 | 4208969 STG5IVE
STG5IVE's picture

You know YUAN it!

Mon, 12/02/2013 - 23:17 | 4208824 max2205
max2205's picture

Remember when everyone wanted to get paid in euros...oh wait

Mon, 12/02/2013 - 23:22 | 4208837 SWRichmond
SWRichmond's picture

The path China is on is clear.

Mon, 12/02/2013 - 23:19 | 4208827 Big Brother
Big Brother's picture

All that currency exchanging hands, and yet, I cannot find the USDCNY pair anywhere.  Let me know when it's in free-float like a normal, major currency. 

Mon, 12/02/2013 - 23:36 | 4208895 laomei
laomei's picture

It's already in a managed float.  There's not really much incentive to let it free float though, seeing as that concept is little more than an invitation to manipulation by the US and others.

Mon, 12/02/2013 - 23:55 | 4208936 Yen Cross
Yen Cross's picture

 Respectfully, that's not correct. The yuan is still nowhere near being floated!

Tue, 12/03/2013 - 00:44 | 4209057 laomei
laomei's picture

Meaning what exactly? They do not allow for the economic fates of 1.? billion people to be fucked around with by foreign speculators using endless free money to make a quick buck? Cus that's all that would happen.  A rapid valuation plus easy access means nothing less than a fucking over just like Plaza.  China, fortunately still has the balls to ignore that bullshit.

Tue, 12/03/2013 - 00:46 | 4209059 Yen Cross
Yen Cross's picture

  Meaning the PBoC doesn't officially FLOAT the yuan>  AM I CLEAR?

Tue, 12/03/2013 - 06:56 | 4209431 Big Brother
Big Brother's picture

Precisely- when I can go on Dukas Copy and get short the USDCNY, then I will know the Yuan is a legitimate currency ready for the basket.

Mon, 12/02/2013 - 23:19 | 4208830 RaceToTheBottom
RaceToTheBottom's picture

I thought that China's equivalent to the FED had three times the balance sheet?  Or is that not relevant?

Mon, 12/02/2013 - 23:27 | 4208867 Tyler Durden
Tyler Durden's picture

The difference is where the loan creation takes place. If at the central bank level as in DM countries, the trade off is decreasing currency faith and credibility. For now, China is going berserk at the bank level, which means it is not its currency, but the bank shareholders who would be impaired when things go south. It remains to be seen just how aggressively (like in the west for example) China will bail them out.

Mon, 12/02/2013 - 23:32 | 4208880 PP
PP's picture

Because our SOEs run as Walking Dead and PBOC/bank allies put so many money into them to let them still run.

 

PBOC's OMO looks like breathing machine

Mon, 12/02/2013 - 23:41 | 4208903 PP
PP's picture

we have too many friends working in many banks in China, some are incharge of bond purchase, (of course they had a tough year) my sister is working in a midium sized bank. liquidity is really tight. they hired lots of people, using lots of methods to grab cash from other banks, everyday. 6 days working per week and 3 night meeting per week, we look after her child......

Mon, 12/02/2013 - 23:48 | 4208912 PP
PP's picture

Tyler we advise you to open an account on Chinese Sina Weibo, and hire some Chinese in USA for good translation.

(you must not mention any political issue but anything else you can post as you full wish)

there are lots of Chinese medias translate your articles then post on Sina Weibo (your copyright?......), but their translation is really bad. they don't know you have humor....

Mon, 12/02/2013 - 23:56 | 4208941 Yen Cross
Yen Cross's picture

  Is this Anon BLOBBING things up as usual?

Tue, 12/03/2013 - 05:07 | 4209366 iLiquid
iLiquid's picture

Hmm, Tyler can totally hire me. I'm native Chinese.

Tue, 12/03/2013 - 00:47 | 4209062 Yen Cross
Yen Cross's picture

  I just want to thank you for taking the time with us retards Tyler.  It means a lot! Thank You

Tue, 12/03/2013 - 07:14 | 4209443 new game
new game's picture

all true-humility goes a long ways-creates a "real" trade of ideas...

Mon, 12/02/2013 - 23:23 | 4208834 IridiumRebel
IridiumRebel's picture

Wait until the "UNITED STATES DEVALUES CURRENCY BY 40%"
Headline.

Mon, 12/02/2013 - 23:32 | 4208878 SWRichmond
SWRichmond's picture

Yes.  Remember, the people who "calculate" the relative sizes of national economies are the same ones who "calculate" inflation, unemployment, etc.

Tue, 12/03/2013 - 00:06 | 4208966 laomei
laomei's picture

Remember how that was the bait that they used to screw Japan?  Japan, ever the willing whipping boy for western bullshit.  See: Plaza Accord. "Hey Japan, you're making all that money, but you're still poor according to our method of calculating things.  How about you de-peg and let us manage things and then you'll have a big GDP and be able to import more things!"

And that's when Japan died.  Suddenly, overnight, all that property was worth a shitload more than it was previously, triggering a bubble that made no sense as everything was literally guaranteed to go up on the forex side, and property makes a great money sink.  As the export sector dies and is forced to become more "efficient" massive layoffs occur which requires the government to start making up bullshit to keep employment figures healthy on the surface.  The swarming masses of fools bail out early, snapping up useless bullshit overseas.  For some reason believing that they'll get richer quicker.  They don't buy things that make any sense, they buy status symbols, mainly because that's all the US is willing to allow them to do and they are not willing to press the issue.

 

What they're left with in the end, is an economy that was geared to infinite easy growth linked to currency valuations.  Interest rates flatten and die to encourage foreign hot cash to flow in.  Infrastructure projects pretty much max out, useless crap is built as the mafia is firmly in control and likes their free money as well.  It's not like China, where infrastructure is built in anticipation to demand, as that infrastructure tends to get used and then maxed out in a very short time.  Japan's already at the limits in that regard, to the point where they build for the sake of building... funneling cash into pockets and jobs to keep the illusion alive.  I'm talking like, literal human traffic cones to worry about an open manhole cover, which was opened, apparently, to allow for a pair of human traffic cones to stand there on an empty street and warn all the pedestrians who never came.  Debt-wise, they are fucked, as they tapped into the savings of everyone to fund this garbage.  Economy-wise, they are fucked, as the jobs they create are meaningless busy work, while those who had savings prior are being drained, leaving a generation experiencing a downward spiral.  We're more than 20 years into the "lost decade" and pushing for 30.

 

All this, because they were dumb enough to take the advice of the US.  Gee, I wonder why China is unwilling to bend over and get fucked up the ass.

Tue, 12/03/2013 - 00:54 | 4209066 Yen Cross
Yen Cross's picture

  Be sure and lick your handlers balls before you get closed in your cell tonight!

 ¶ Dick Head

 ¶ Retard 

 

Tue, 12/03/2013 - 02:00 | 4209165 laomei
laomei's picture

Be sure to worship your fascist masters and complete your 5-minute hate of actual freedom before big brother no-knock raids your home "by accident" and shoots you in the face.

Tue, 12/03/2013 - 02:03 | 4209172 Yen Cross
Yen Cross's picture

 River pig on the menu? Blobbing up bloated /unfloated "river Pig"?

Tue, 12/03/2013 - 05:57 | 4209393 Zwelgje
Zwelgje's picture

Want some fuku-fish?

Tue, 12/03/2013 - 09:24 | 4209592 Jimmy Carter wa...
Jimmy Carter was right's picture

He's right, but China already has a property bubble, any de-pegging would blow it till it burst.  How this stock bubble in the US bursts will be interesting and dangerous.

Tue, 12/03/2013 - 06:05 | 4209394 Doubleth1nker
Doubleth1nker's picture

That is generally how the US govt has maintained global hedgemony the last few decades.  Rather than promoting a sound economy and prosperity at home, it seeks to so badly sabotage and sow chaos overseas that the USSA looks comparatively better even though effectively this means the whole planet is circling the drain.

 

Don't think that China isn't drinking the kool-aid as well, they have a Madoff-style banking system and a money printing central bank that makes Bernanke look like a goldbug.  The yuan is simply the alternative currency du jour like the Euro used to be.

Tue, 12/03/2013 - 06:45 | 4209420 matrix2012
matrix2012's picture

Very well said laomei.

 

Folks already forgot about the PLAZA ACCORD.

I recall the after effects whereas the Japanese broke record after record in the many auction houses buying the shitty paintings worth of hundreds million of Fed's confetti each... then the Japs felt high as the world's nouveau-riche :-)

Tue, 12/03/2013 - 09:26 | 4209599 Jimmy Carter wa...
Jimmy Carter was right's picture

So will history repeat?  How will China avoid becoming Japan?  How can you avoid any of this, the more I think about it the scarier the options get.  You know what those in charge are capable of.

Wed, 12/04/2013 - 00:34 | 4212763 MedTechEntrepreneur
MedTechEntrepreneur's picture

 " It's not like China, where infrastructure is built in anticipation to demand, as that infrastructure tends to get used and then maxed out in a very short time."

How many cities have been built and are ghost towns? And the Chinese CB makes  Bernanke look like an Austrian!  Come on...China is the biggest cluster-fk on the planet.  By far.

Tue, 12/03/2013 - 13:09 | 4210524 Nue
Nue's picture

Loose change will be defined as $50 and $100 dollar bills.

Mon, 12/02/2013 - 23:36 | 4208889 FieldingMellish
FieldingMellish's picture

Time to crush gold out of existence...

Mon, 12/02/2013 - 23:46 | 4208917 auntiesocial
auntiesocial's picture

why is Fox News not running this story? must be that Kin-Sing-Young economics thing they keep referring too...

Tue, 12/03/2013 - 00:03 | 4208958 bubblemania
bubblemania's picture

Bullish

Tue, 12/03/2013 - 02:08 | 4209183 Yen Cross
Yen Cross's picture

        Here's what is going to happen.  Head spins. China is irrelevant.  Yu're being fuked,chop suey, and don't ka'no it!

Tue, 12/03/2013 - 04:35 | 4209334 Joe A
Joe A's picture

It will become really interesting when countries start selling their oil for Yuans. Saddam tried with Euros and Khadaffi tried with funny money and we all know what became of them. Would the US have the nerve to go after countries that sell oil in Yuans instead of Dollars? Much at stake here for the petrodollar.

Tue, 12/03/2013 - 06:03 | 4209397 WTFUD
WTFUD's picture

That slave mentallity will not have you going places. Forward Comrade!

Tue, 12/03/2013 - 06:12 | 4209403 WTFUD
WTFUD's picture

Cambo's not my cup of tea but fair play to him he's going where the UK's bread will be buttered. It's everyone for themselves in a dog eat panda world. Guns wont be king in the new paradigm.

Tue, 12/03/2013 - 07:28 | 4209456 new game
new game's picture

this is an epic struggle til the last of the oil is used, even ten miles below. at 200/ barrel we will just go where the cost takes us.

who has the price power. not sure it matters anymore as we are exporting refined product in fucking dollars and importing in dollars from sudiarabia(and that won't change anytime soon). fracking to beat the band. yea it may all change some day, but for know no petro dollar worries...

Tue, 12/03/2013 - 09:26 | 4209598 esum
esum's picture

today's dolla is worth $0.03 relative to the  1913 dolla ... how dare anyone says its worthless

 

Wed, 12/04/2013 - 10:37 | 4213538 TrulyStupid
TrulyStupid's picture

What this country needs is a good 5 cent cigar:.. er make that  1.60.

 

Tue, 12/03/2013 - 09:44 | 4209659 esum
esum's picture
The official U.S. Government gold price has changed only four times from 1792 to the present. Starting at $19.75 per troy ounce, raised to $20.67 in 1834, and $35 in 1934. In 1972, the price was raised to $38 and then to $42.22 in 1973. A two-tiered pricing system was created in 1968, and the market price for gold has been free to fluctuate since then. So if the current dollar is worth $0.03 and gold is $1223 it would be $37/ounce or close to where it was in 1972 when the Fed accelerated printing and the volume of dolla went hockey stick. So the fed has $0.03 cents left to play with so to speak.  http://research.stlouisfed.org/fred2/graph/?chart_type=line&width=1000&h...[1][id]=AMBNS
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