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40 Central Banks Are Betting This Will Be The Next Reserve Currency
As we have discussed numerous times, nothing lasts forever - especially reserve currencies - no matter how much one hopes that the status-quo remains so, in the end the exuberant previlege is extorted just one too many times. Headline after headlines shows nations declaring 'interest' or direct discussions in diversifying away from the US dollar... and as SCMP reports, Standard Chartered notes that at least 40 central banks have invested in the Yuan and several more are preparing to do so. The trend is occurring across both emerging markets and developed nation central banks diversifiying into 'other currencies' and "a great number of central banks are in the process of adding yuan to their portfolios." Perhaps most ominously, for king dollar, is the former-IMF manager's warning that "The Yuan may become a de facto reserve currency before it is fully convertible."
The infamous chart that shows nothing lasts forever...
Nothing lasts forever... (especially in light of China's recent comments)
As The South China Morning Post reports, Jukka Pihlman, Standard Chartered's Singapore-based global head of central banks and sovereign wealth funds (who formerly worked at the International Monetary Fund advising central banks on asset-management issues), notes that:
At least 40 central banks have invested in the yuan and several others are preparing to do so, putting the mainland currency on the path to reserve status even before full convertibility
The US dollar remains in charge (for now)...but
The US dollar is still the world's most widely held reserve currency, accounting for nearly 33 per cent of global foreign exchange holdings at the end of last year, according to IMF data. That ratio has been declining since 2000, when 55 per cent of the world's reserves were denominated in US dollars.
The IMF does not disclose the percentage of reserves held in yuan, but the emerging market countries' share of reserves in "other currencies" has increased by almost 400 per cent since 2003, while that of developed nations grew 200 per cent, according to IMF data.
As SCMP goes on to note, the rising popularity of the yuan among central bankers is probably mainly due to Beijing's extremely favourable treatment of them as it has sought to encourage investment in the yuan.
For example, central banks enjoy preferential treatment in the qualified foreign institutional investor category, both on the size of the quota and the length of the lock-up period. The QFII quotas given to central banks are not publicly known, but some of those announced by investing central banks are up to 10 times larger than others in the programme and, most importantly, free of any capital controls.
"Central banks and sovereign funds have special treatment," Pihlman said. "They have the ability to invest in a way that any other investor does not have. When it comes to convertibility, there is nothing formally out there, but it is fully convertible."
As Pihlman explains, things are accelerating...
Pihlman said "a great number of central banks are in the process of adding [yuan] to their portfolios".
"The [yuan] has effectively already become a de facto reserve currency because so many central banks have already invested in it," he said. "The [yuan] may become a de facto reserve currency before it is fully convertible."
The central banks more likely to add yuan holdings in the future were the ones with "strong trade linkages to China" and those which had relatively large levels of reserves which could consider diversifying more for return-related reasons, he said.
"The [yuan's] convertibility may be already there for central banks in a way that has got them comfortable to start investing in the currency," Pihlman said.
We leave it to a former World Bank chief economist, Justin Yifu Lin, to sum it all up...
"the dominance of the greenback is the root cause of global financial and economic crises,"
It appears the world is beginning to listen
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lead, gold, cigs, booze, food, and pussy.
not necessarily in that order.
"not necessarily in that order. "
And depending on the time of the month for at least one of those items.
CNY won't be a reserve currency. However, it will hold its value when the world shifts to a new reserve currency, something that cannot be said of any Western currency. So it makes sense for the central bankers who expect the world to switch to a new reserve currency to hold some CNY in their forex assets.
CB's do not "hold" a reserve currency, but rather the bonds of the issuing country denominated in that currency. So, look at China's bond market and how it is being managed to understand the actions of the CBs.
It is not necessary for a Central Bank holding a foreign currency to invest it in the bonds of that country, it is an option and is even dependent on the host country permitting it (a nation may prohibit foreigners from holding its government debt), but holding as cash balance in a bank account is always allowed.
Gossip. When you see commerical banks holding assets in yuan it means that doing so is profitable. Worry only then. All else is ZH crap.
Kiss off mate...
Or it could mean they have no choice by law. Profitable too? Maybe.
But I guess that really was just gossip.
It's my opinion the Chinese were buying Gold, and the West was transferring Gold to China, because of the IMF 2010 reform act, which required the valuation of every currency be based on an asset pool of the nation. Since China imports most raw materials, it needed something on which to base its currency... Gold may be China's primary backing, and its 1 Billion people (slaves).
The SDR will be the new World Reserve Currency, Yuan will be a part of that SDR. The new to be announced US Treasury Note, to replace the fiat Federal Reserve Note, will also be asset backed, and become part of the SDR. The replacement note will be resource backed, but the FRN will become useless quite quickly and result in a large reduction in value.
It's expected someone in GOV will announce the new TRN or UNT or UTN any minute now... before mid April... the rest of the world would prefer it had already happened... the US I believe is stalling for the Iraqi election to announce both the IQD revaluation, and the US posession of lots of IQD and then the introduction of the TRN. SHould be an interesting few days.
On what basis would anyone think that China can be the world's reserve currency? They can't provide Yuan on demand and run a trade deficit with the rest of the world to provide those Yuan. They have to allocate bank credit by political need (it's why all of your crap is made over there -- they subsidized the creation of the factories). Their national accounts are a mess (much worse than the US's at the current moment), and the debt levels can't be repaid. Once demographic decline hits them with full force, they will be unable -- literally unable -- to maintain any true levels of growth, especially once they are forced to clean the water and air that they have currently polluted beyond any use.
So, again, why the Yuan?
Wow thats excactly what I was thinking. China's unfair trade advantage would be gone. US companies would leave China en mass because it would become much more expensive to make all those trinkets for wally world.
Bad bet, it is easily predictable future socio-economic instability in China. Even without the intervention of global-boys which will be busy with the same problem.
The Yuan as the world reserve currency?? HA. Ok if that happens then the USA would see a tidal wave of jobs return because the unfair trade advantage China has would be gone. They couldnt maniplulate their currency, and it would be more expensive to make things there than in the USA.
Why couldn't they manipulate their currency? We manipulate ours.
China, hard to believe, is more corrupt than the USA.
The yuan is backed by rivers of dead pigs and central bank greed.
different rivers, pigs and greed, same corruption.
No matter the facts, a reserve currency and its value is all based on belief.
If the world thinks 'X' is now the defacto reserve currency it is so.
I believe the Yuan has a very long way to go before it becomes or even wants to become the reserve currency of choice.
China is too profitable and enjoying our capitalist money without the bother of having a real floating currency.
They smile, bow and say 'please send moare'
that's funny seeing how the chinese make the yuan weaker against the usd every year. i guess central banks are sopping up clown-yuan to try to strengthen it. the race to the bottom continues.
Seen this fucking chart about 100 times here Tyler.
"The [yuan] has effectively already become a de facto reserve currency because so many central banks have already invested in it," he said. "The [yuan] may become a de facto reserve currency before it is fully convertible."
Sure, a fucking communist dogshit regime's currency is going to become reserve. The US is bad, but bad to worse solves nothing.
If you buy a home with a conventional mortgage you sold yourself into servitude. You never own your land you pay rent via property taxes with mortgage or no mortgage. No real money changed hands as you agreed to pay principal and interest for the life of the loan. No sweat equity except your promise of your own for the next 15 to 30 years is changing hands. Numbers on a ledger somewhere moved by someone with the click of a mouse and perhaps some printed paperwork. If we knew how the banking system really worked we would burn them all to the ground. Now, I cannot trade my services for groceries at the store so we need some form of currency. Trading beaver pelts worked once as did salted cod in this country. We need a change because we and our children and grandchildren are being stolen from on a daily basis. If you bring this up with most people you get a blank stare. I feel at times like a hamster on a wheel. In Chicago the mayor is going to raise property taxes by 50 million a year to bail out a couple city workers pension plans. He is circumventing the state legislature by having his city aldermen pass the bill into law as the state voted it down. This will not address the police and firemen pensions which are also seriously in the hole and will be addressed next year. A whole city of slaves to the public workers pension funds. And before anyone rails on me about unions and the hardworking public workers and heroe cops and firemen I spoke with a just retired union plumber and he told me with wages and benefits he retired making just under 90 dollars an hour. For those of you in here working for an hourly wage how many of you are knocking that down with potential time and half as well? Our nations is well and truly going to turn over. Like a lake does in the fall when the surface water cools enough and sinks and all that death at the bottom floats up to the light and air,,, our society is due for a great cleansing,,,, learn now how to hold your breath for the big turnover,,,,,, good day to all.
The almighty dolla will be the reserve currency as long as US military is strongest.
yep - and if you have an issue with this, you can take it up with one of their aircraft carriers.
The Russians and Chinese have an app for that.
Thus the recent build-up of the Chinese Navy. A reserve currency must have strong backing to throw it's hegemony aorund.
Yeah, nothing lasts forever, just a REALLY REALLY long time according to that chart. By the time the $ loses its grip as the reserve currency we'll all be dead, so why worry about it now?
Anybody see the any of the new Canadian polymer money? It's my reserve currency since the USD is on the ropes, I'll try some of that Canadian money.
Who gives a goddamn about some athiests who are too sensitive to raise their tolerances and quit being such pricks and throwing a hissy fit because somebody here quotes the Bible from time to time? Jesus Fucking Christ Almighty, they need to get a grip, the dumbasses.
Fuck the athiests, the stupid bastards.
I hope I didn't offend any of them, if I did, I am truly sorry.
They can go right straight to hell, I'll see them there.
How the fuck can a central bank "bet" on a currency.
they design who has the currency and completely control whatever country has it.
The devil is in the details, quite literally, because whether you like it or not the devil and his children control this world. People say they are waking up but they are still asleep.
ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ
The funny thing is certain people think their going to come out on top of this but they have a revelation coming too because all that motherfucker does is use people up and throw them under the bus. If lies, deception and murder is what got you to the party, that party is never going to end and when all the dolphins are dead the sharks have no choice but to turn on eachother.
inbreeding=psychopathy=world full of souless demonic killers. The fucking rings of Saturn are going to break , the monster released and then hell on earth, as if it wasnt already.
fuck that and fuck your central banks and your evil bullshit.
Allow me to simplify;
When fraud is the status quo, possession is the fucking law.
hedge accordingly...
No government can be trusted, but a communist government can be trusted the least of all. If you can't trust a government, how can you trust its money??
Don't tell me Yellen will be allowed to print Mao as well as the George Wash.
Maybe they have a course on counterfeiting over at UCLA. I worked at Miller Printing in Pittsburgh. I know how to make money.
Let me be clear; ALL paper is going to ZERO.
That is all...
Now, that's what I call good old Sunday school preaching, you Rock man!
Why Yuan when chinese bond is defaulting?
OT:
Drone tracker app.
http://mashable.com/2014/02/07/apple-app-tracks-drone-strikes/
"Rest of the world is going back on a gold standard whether we like it or not..."
you mean we'll be able to take their fiat (please note correct pronoun) and exchange it for gold as a normal part of economic activity?...highly doubtlful...any gov't offering that option would be wiped out in a day...
people won't want to lug a pound or two of ag or au around, but those will be the only "things" with universal value...so what will emerge as a useful and trusted exchange medium?...whoknoz...
Fonestar, wait!! You will have a chance to speak....
Hmmm.
The Chinese have been perfecting graft and fraud for 3000 plus years.
I'm betting, 2¢, that the Chinese will kick some bankster a$$, then kick everybodies a$$, that is still standing.
Reset either last year or sometime in the future.
However, by the time it reaches that point I'll either be dead or off the grid, so I'll never know.
I always, in my writing, preach Industrial production and export being very necessary as a key component to an economy! Please see (hedgemastermb.blogspot.com) It's very important to read and understand the articles there! Now we see what 50 years of ignoring competitive industrial production has done.
We have concentrated instead on International Banking, Services Industries, and Government growth and employment! In the 1970's. Now we're dead unless we immediately go out cut our prices and compete.
And in the future:
"the dominance of the Yuan is the root cause of global financial and economic crises,"
Friday, July 8th, 2011 @ 15:30
"The New One World Currency, which will be presented to an incredulous community, is designed to control you. Then once that happens they will try to deprive you of food. Unless My children accept this reality now they will be defenceless when they are under the control of a New World Order, led by masonic forces. "
http://www.thewarningsecondcoming.com/eternal-father-will-prevent-new-wo...
Friday, July 8th, 2011 @ 15:30
"The New One World Currency, which will be presented to an incredulous community, is designed to control you. "
http://www.thewarningsecondcoming.com/eternal-father-will-prevent-new-wo...
Friday, September 23rd, 2011 @ 21:30
"Prophecies will unfold, as the world will be controlled by the antichrist, who will attempt to control you through a New World Currency. When and if you are controlled in this way, you will be controlled in every other way."
http://www.thewarningsecondcoming.com/god-the-father-the-anti-christ-and...
If the Yuan becomes the world reserve currency, this would cause the US$ to decrease in value.
Sooooo, wouldn't this mean that it takes more US$'s to buy an equity(stock) or commodity(gold)...
Thus, on a US$ nominated bases, stock prices, gold prices, and oil prices should all go up...right?
That sounds about right. Add to that the fact that the Yuan would go up and pinch Chinese exports. The US manufacturing base would be rejuvenated and be more competitive on the world stage.
Once the Yuan starts to appreciate, societal tensions within China (between the haves and the have nots) would escalate. Potential societal turmoil will put the brakes on the appreciation of the Yuan. Many "haves" will run for the exits and look to invest overseas. The US dollar would start to appreciate.
Wash, Rinse, Repeat.
The limiting factor in all of this is the societal tension within China. Unless they square things domestically, they will not become a true reserve currency. The use of the Yuan will be limited and one only needs to watch the bond market to see where things stand.
OK, my two cents. Kirk, above, had it about right, i.e., a number of regional reserve currencies. Laws of Physics (also above), had two succinct postings, i.e., "when fraud is the norm, possession is the law" ad "all fiat going to zero." I may have paraphrased a bit. Mea Culpa.
The idea of a reserve currency is all well and good in discussions of macro-economics, but, since we all live in a micro-economic world on a day-to-day basis, let me propose this: You are your own currency. In other words, your labor - the crux of Adam Smith's theories in The Wealth of Nations - is YOUR currency. Better yet, what you produce by your labor is YOUR currency.
In the end, what we all desire is some modicum of freedom and security. We count on our governments for both, but, in the breakdown of civilization, we must find them for ourselves.
My proposition posits that one's labor and produce will render both individual freedom and security.
My theory rests upon a number of somewhat "radical" concepts which are quickly becoming more mainstream: cultivation of land and generation of power. One can truly be free and live without worry only if one is capable and serious about departing from the "system" as it is currently contrived. Anywhere from 6 to 20 acres - depending upon how many people you plan to support - should be sufficient to produce enough food to feed oneself, enough timber to build structures for housing, and enough surplus to sell to whatever buyers are left to pay the inevitable taxes on said property. It's important to check - for now - what the zoning laws are wherever your land is in order to receive agricultural assessment, which is much lower than residential or commercial.
The land should also allow for solar, wind, geo-thermal, small hydro power generation. Enough for your needs. If you produce a surplus, you may be able to sell some. An unseen bonus. Having some gold, silver, arms, ammo, are also important.
So, bottom line, what I've been preaching - along with countless others - since 2006, is to invest in gold, silver (currency, just in case you don't have a surplus or the post-apocalyptic world won't accept fiat, though barter would likely be widespread), land, tools, machinery, and lately, the means to produce non-distributed power generation. Being an animal lover, but not well-versed in husbandry, some livestock would make plenty of sense. Just like they say in investing, diversifying is a good idea. If some crops fail, maybe the animals producing meat will suffice to tide oneself over.
Bottom-lining this is that living in the cities will be suicidal at worst, masochistic at best. The only survivors - outside of roving gangs, thugs and very rich people - will be in the country, on one's own productive land.
I have a bad habit of asking my friends, "If I have my own land, produce my own food and generate my own power, why should I work?" Generally, I do not get answers, but blank stares, which demonstrates just how far removed from reality most people are, and most of my friends are pretty smart cookies.
Back to the farms, folks. Green Acres is the place to be.
The reserve currencies of the world have been, are and will be silver and gold. Everry central banks does hold gold and/or silver. And if the paper goes down the PM will help anyone over the day.
And really striving for Yuan-Fiat instead of USD-Fiat is a striking stupid idea.