UK Hints At Next Reserve Currency, To Issue Chinese Yuan-Denominated Bond

Tyler Durden's picture

Yuanification continues around the world. As The USA attempts to corral its allies in a 'broad coalition', an increasing number of people - including domestic economic policy advisors - are shifting away from the USD as primary reserve currency. However, the move by British Chancellor of the Exchequer George Osborne, announced Friday, is likely the most notable yet in the world's de-dollarization. As Xinhua reports, the British government intend to be the first nation (ex-China) to issue Renminbi denominated bond and to use the proceeds to finance the government's reserves of foreign currency. Osborne described this dialogue outcome as "a historic moment" and a statement of British confidence in the potential of the RMB to become "the main global reserves currency".


As Xinhua reports,

British Chancellor of the Exchequer George Osborne announced Friday that the British government intend to issue a Renminbi denominated bond and to use the proceeds to finance the government's reserves of foreign currency.


"I can now announce that the UK government intend to be the first national government outside of China to issue a bond in China's currency. We issued bonds in U.S. dollar before, now we will be issuing a bond in RMB," said Osborne in the press release of the Sixth China-UK Economic and Financial Dialogue (EFD).


Chinese Vice Premier Ma Kai and Osborne concluded the meeting of the Sixth China-UK Economic and Financial Dialogue in London.


Osborne described this dialogue outcome as "a historic moment" and a statement of British confidence in the potential of the RMB to become "the main global reserves currency".


"And let me be clear, as China becomes a bigger and bigger part of the world economy, their currency is going to be used around the world. We here in Britain understand that, and we want us to be the first country in the west to seize the opportunities that it will bring," declared Osborne.


Meanwhile, the issuance of Chinese currency bond means jobs and investment in Britain, which the government's long-term economic plan is all about, noted Osborne.

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With friends like that, does the USA need more enemies? Time for some Uk sanctions...

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ebworthen's picture

"It seems to me to be the largest ponzi scheme in the history of the world." 

I think you answered your own question.

People buy them because defaulting on government debt is the last default before a reboot.

F0ster's picture

"People buy them because defaulting on government debt is the last default before a reboot."


I'd also add, that financial institutions buy them as loss leaders to dump on thier muppets in order to be permitted by said Goverments to perpetuate more crinimal and financially rewarding activities.

Hohum's picture


Well, government will tax to make sure you get your nominal principal back.  With other "investments," who knows?

ekm1's picture

Every single thing I said in May 2013 is becoming reality gradually


Negative GDP? check


"Suicides"? check


Sudden wars? check


World abandoning USD? check


Only thing left: Triple Lehman

Soon come

thunderchief's picture

I don't recall you predicting any of that. I think you may be just saying for political gain.

ekm1's picture

I never predict.

I only look at reality.

That stuff started occuring here and there and it became obvious that it would expand fast.

gmrpeabody's picture

"Every single thing I said in May 2013 is becoming reality gradually"

"I never predict."

At least one of these statements has to be false...

just saying.

ekm1's picture

Saying = looking at unfolding reality, not prediction

LawsofPhysics's picture

Really?  Where are all the "bullets in the head"?  You were so optimistic.

ekm1's picture

that is the new one, only recently thought of.

I thought they would surrender like in 2008. They didn't


Even the time prediction of rate rise or margin call before Dec 31st 2014 was based on the assumption of surrender like in 2008.

They didn't, at least until now.

Still time left.

shouldvekilledthem's picture

China is maybe the most exposed country to the US debt.

Someone please enlighten me how this affects their potential reserve currency status?

Winston Churchill's picture

If you believe that, I have some nice coastal property for sale in Utah you might be

interested in.The FedRes would never lie to us, now would they ?

I can also think of several ways to unload that liability on western banks while

appearing to still own the USTs.I'm sure those ideas occorred to someone at the PBOC

as well.

madcows's picture

It must be easier to manipulate the Yuan than the Pound.

F0ster's picture

The EU needs bonds to buy to generate balance sheet assets for their QE program, these Chinese bonds would be better bet than any euro junk bonds IMO

ebworthen's picture

Empire past bowing to empire future.

falak pema's picture

When you shoot at Putin's Oligarchs you have only one real option : seduce the Chinese Oligarchs, as the ME Oligarchs are already in Londonistan. 

Son of Loki's picture
China creates its first no-cellphone sidewalk lane


We're not always #1.....................::((

kowalli's picture

You are not ever existed 300 years ago....

kowalli's picture

"We're not always #1.....................::(( " - wtf was this???

Huh??? too exceptional?

ebworthen's picture

I'd call that "defeating Darwin".

yogibear's picture

The UK has become an embarrassment. A once great country will soon be setting up loudspeakers and prayer rugs for it's daily chant to Mecca.

Everybodys All American's picture

Do you really think people like Pelosi, Reid, or Obama are any different? The embarrassment will be here a lot sooner than people realize when the borders are unkempt.

Perimetr's picture

"Et tu, Brute?"

hahahahaha like most divorces, money is the deciding factor.

p00k1e's picture

The sooner the U.S. goes belly-up, the sooner the Euthanization can commence on the Senior Citizen population here.

And handicappers….. 

Everybodys All American's picture

Be careful what you wish for because some day even you'll be a in a minority represented group.

kevinearick's picture

Connecting Dots

The rivers are vanishing because the civil servants are sucking them dry with irrational developments in the State grant cycle, to create excess demand over supply, to fuel inflation in a deflationary cycle. Juveniles collecting toys by impoverishing their children have no business telling parents how to raise their children. A community doesn't raise a child. You do, or it doesn't get done.

Building economies is like building homes. You build the home, hand over the keys to the new owners, and build another, until you retire. What sense does it make to build empty houses for the State, just so you and your children can live in the street, because that's what derivative morons did before you, based upon State imperatives?

Have you noticed that the political networks have nothing to offer the Scots, but threats, based upon fear? Does London Have the natural resources to feed its population?What is the inflation rate of London Square? America is quite capable of providing its own energy, so why is it so worried about Saudi oil subject to rapidly falling demand?Why are New Yorkers and Londoners controlling land in California? Why is Jerry Brown trying to make money out of pot?

Of course the short term thinkers graduating from public education, to maintain the status quo with busy work, cannot see the new economy in transition. If you have developments in the can, you might want to begin inserting them, and if you don't, you might want to get busy. Only morons go to the voting booth to demand equal rights, expecting change.

Whether the Scots split is not going to be determined at the voting booth, any more than Londoners are going to determine whether the Scots are good land stewards. The Scots have more oil than they can ever use. And what has any navy on this planet done since 2007, except suck the coffers dry with their irrational international trading schemes? Do you see highly intelligent labor showing up to any of their wars?

California has had one of the worst performing education systems over the last 50 years, built on standardized testing, and yet it continues to print toilet paper in exchange with other morons doing the same, wiping out purchasing power with a revolving immigration door. Why do you suppose that is? Why are all these empty units being bid up in a global city circle jerk, and what do you suppose is going to happen?

Don't wait for the fascists to knock on the door.

My grandma didn't think twice about taking a switch to my a*, and my father didn't think twice about giving me a belt, because I was taking heavy equipment for joy rides when I was 5, but no teacher ever threatened me while they were around. The teachers did threaten the kids watching TV, learning to conform, who are now the passive aggressives operating drones, who like to think that they are a threat, to something other than busy work.

International trade among juveniles, the toilet paper they print, and the wars they wage, against each other, is not the foundation of civilization. You are, if you choose to be, a human being, instead of a derivative.

Who do you suppose presided over the California Master Plan for Higher Education? “When he was 12 and selling Liberty Bonds on street corners, he would end his spiel with, ‘Give me liberty, or give me death.’ ”

Jano's picture

Insurance against the loses, if Scotland votes yes?

Tachyon5321's picture




In 2009, Obama insulted the then-Prime Minister Gordon Brown by gifting the UK a box set of 25 DVDs and signed picture of the Obamas.  Gordon Brown was so embarrased with Obama's comtempt of the UK that our relationship after all these years has never recovered.

So this is a huge F- U President Obama.


Without question,Obama, Kerry and Hillary have trained wrecked Americas' foreign policy

teslaberry's picture


WhyWait's picture


But Great Britain has adjusted to being a secondary power within the Empire, and shows no sign of changing its stripes.

Osborne and Scums still think in terms of a unipolar world.  Putin of a multipolar one.

Does China aspire to become the capital of the Empire?  Or a leader within BRICS, heir to the "nonaligned movement"? 2000 years of Chinese history would say the former, but Chinese actions over the past 10, 20 or even 100 years mostly belie that.

Like Russia, China is a nation of nations, a nation whose people have within the past century overthrown their feudal landlord class and foreign would-be rulers and risen up at huge cost to throw out invading imperialist armies.  Chinese investments in Africa have been mostly constructive and overwhelmingly non military.  And in a world where the US has 1000 foreign bases and 350,000 troops stationed abroad China has virtually none.

Without meaning to compare China with Jesus, Osborne's statement brings to mind Satan showing Him the riches of the world and saying All this could be yours. And who among us hasn't faced such a moment?

Osborne's other message, whispered in their ear I would imagine, would be "Russia's going down.  Do you want to go down with them, when you could be one of us, our leader even?"

China has a deep history with England too.  They well remember the Opium Wars, and a century of plunder and humiliation at the hands of Perfidious Albion.  They will play their own game, carefully.  

This is a win for China, but the crown is not Britain's to bestow.


crazytechnician's picture

Red Herring.

The Chinese have already made it very clear they do not want to shoulder the burden / responsibility of maintaining a global reserve currency.

In fact no body does.

Leave it to the computers.


Bitcoin , BTChez ......

Frankly Speaking's picture

Only one more small cut to the massive trunk of debt before the whole tree will come crashing down.

Duude's picture

The Chinese have their own problems. First and foremost is their economy is still utterly dependent upon keeping their currency undervalued. That means printing Reminbi to use to buy dollars, Euros, and Yen.  Without this, they'll start losing business and jobs which might bring about civil upheaval the Chinese don't want to deal with.  In the meantime, their inflation rate is likely one and one half times more than what they claim, they have a garguantan amount of domestic debt used to stimulate the economy going unpaid, and their largest trading partner, (the EU) will need the Chinese to double up their support of the Euro as it circles the drain.

unemployed's picture

I thought this was covering some article in  but WTF....  

nakki's picture

Yes because the Chinese haven't printed enough fiat already. Surly they will manage being the reserve currency much better than everyone else have.

nakki's picture

Should be great for exports.

lasvegaspersona's picture

Buying/selling a few bonds denominated in the Yuan will not make the Chinese currency a reserve currency.

I doubt the world will ever, collectively allow any one country that privilege again. It has been a disaster for the world and even moreso for the USA.

Yes we got a lot of things (like oil) at a discount. The government got to expand far beyond the bounds that taxation alone would have permitted. The price the country paid was enormous. We lost our industrial base.

The future will be different. 

Reserves are needed by central banks to defend and manipulate the value of the currency they print. They really don't need that much in ordinary times. If gold were priced higher it could work fine. Judging by the structure of the Euro, gold is what the ECB plans to use in the slightly distant future. I suspect that the resty of the world has seen this and are making the same plans.

Reserve currency status would be a 'poison privilege' (h/t Robert Triffin) for the Chinese. They need to export to survive (all countries do today). Having the reserve currency would leave them in the position of the USA in 1980. They would soon be developing their own version of NAFTA etc.

Gold works better and will be the way things go.

asiafinancenews's picture

"UK Hints At Next Reserve Currency, ..."


Issuance of foreign currency bonds by various national governments is a long-standing practice in international finance. Japan has issued U.S. dollar 'Yankee" bonds since at least the early 1980s, and the U.S. has issued yen-denominated "Samurai" bonds since that time as well. Such practice does not portend a "new reserve currency".

rejected's picture

After watching how the u.s abuses their reserve currency why on earth do the same with another nation who will most likely do the same?

Gold should be the reserve currency but that won't happen precisely for the reason I just gave. We want something that we can manipulate, gold is difficult and does not take to manipulation well.(in it's monetary role)

Doing the same thing over and over expecting a different result is the definition of ..............


Super Hans's picture

Time to add a 51st state I guess; at least they speak English!

Youri Carma's picture

U.K. to Sell First Yuan-Denominated Bonds for Currency Reserves
12 September 2014, by Lucy Meakin (Bloomberg)

onmail's picture

Yuanification == Mummification of USD$

Thumbs up to BRICS

Bite the dust -- you former colonist tormentors , murderers of millions and now hiding behind suave civilized curtain created by wealth looted from us.

Destiny demands its payback.

And remember the Juice virus has already infected the US economy , invading all cells & pockets of wealth , slowly reducing the entire steel frame to rust till it crumbles and becomes dust.

Destiny , again

vyeung's picture

they can't sanction the BOE, they own the Fed.