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No SDR For You: IMF Tells China To Wait At Least One Year Until Reserve Basket Inclusion
If there was any confusion as to whether the recently devalued Chinese yuan would be landing in the IMF SDR basket on January 1, the Fund just cleared it up.
As Bloomberg reports, a recommended extension of the current basket to September 30, 2016 was approved by the board on August 11:
IMF executive board extends current composition of its Special Drawing Rights for nine months until Sept. 30, 2016.
IMF staff had recommended extending the current basket, which was due to expire Dec. 31, to minimize disruption if yuan added.
Board decision gives SDR users "sufficient lead time to adjust in the event that a decision were to be taken to add a new currency to the SDR basket"
Board made decision Aug. 11, IMF says in statement
And from WSJ:
The fund’s executive board approved an extension of the current basket of reserve currencies including in its special drawing rights, or SDRs, to September 30, 2016. The board’s action confirms an earlier proposal for a delay in the five-year re-evaluation of the basket, which doesn’t include the yuan, and it said a decision on the future basket is expected by the end of the year.
Although Beijing has outlined plans to liberalize its financial markets, the yuan doesn’t meet the IMF’s key criteria for reserve currencies to be “freely usable,” meaning countries could face problems trying to buy and sell the currency in a pinch.
And while the move supposedly won't affect the Board's decision on whether to include the yuan, it's certainly interesting that the IMF happened to decide that there's "merit in agreeing on a limited extension of the current valuation basket," the very day (or, technically the day after) China devalued.
Here's a little background for the uninitiated from Barclays:
The SDR is an international reserve asset created by the IMF as a supplement to member countries’ reserve assets. The total allocated SDR as of now is 204bn or about USD280bn.
However, the SDR is not considered as a currency or a claim on the IMF. Instead, it is a potential claim on IMF members for the so called “freely usable” currencies, currently the USD, EUR, GBP and JPY. In addition to its role as a supplementary reserve asset, the SDR serves as the unit of account of the IMF and many other international organizations.
When to use an SDR? An SDR allocation is a low-cost way of adding to members’ international reserves. For member countries that choose to hold their allocation, the net carrying cost is effectively zero. If a member’s SDR holdings are below its allocation, it incurs a net interest obligation. Conversely, members receive interest at the SDR interest rate on the amount that their holdings exceed their cumulative allocations. In the case of an IMF lending program, the member receives a loan amount proportional to (or times of) its quota (denoted in SDR) and pays interest according to its net position (with a scheduled principal payment).
Why does the RMB matter?
China is eager to achieve international recognition of the CNY as an international reserve currency, on par with others included in the SDR basket, due to the increased use of the CNY in trade settlement and in bilateral central bank swap lines, and China's status as the world's second-largest economy. The IMF’s review of the options for widening the SDR will examine two factors: the export criterion and the “freely usable” criterion. For the former, the RMB is certainly qualified, as China is now the world’s largest exporting country. The most challenging factor for the RMB will be the second one, eg, a freely usable currency.
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Big gold reserves are not enough.
China needs to make the Yuan easily convertible if they want a seat at the SDR Table.
EDIT:
Managing their currency by devaluation does not help their case either.
SDR is irrelevant. Get a life...
angel_of_bokchoy is right. SDR is irrelevant, but the CNY is never going to be taken seriously on its own until it goes fully convertible.
Right now, it's structured as an obvious roach motel. They say that roaches can live for two weeks after you rip off their heads, and that's the only kind of roach that stumbles into the Chinese money trap these days. I had to use 12 friends registering with SAFE that they were sending money to their relatives abroad, when none actually had relatives abroad, in order to get my money out of China. It was ridiculous. Anyone who thinks that system works and is the way that Chinese money becomes respected as a world currency is just a loon or a maroon.
I'm going to assume that the SDR is eventually going to become an even bigger, better roach motel.
"Freely convertible" isn't going to mean all that much once the new and improved NWO takes effect. Which will be after the current paradigm collapses, of course.
...and if you don't like it, we can send you another present from the sky
Fuck China ----one step away from the next "cultural revolution" this time it won't be intellectuals looking into the pits it will be the "nouveau riche" ------- "little red book" any one?
Countries could use CNY for trade, as medium of exchange only. If the same countries want to park their reserves into something that would retain its value over time, there is always gold. Even though gold (physical) does not pay any interest, its market value will be more stable in time than any of the fiat currencies currently in circulation, and will always be easily redeemable in any currency of choice (incidentally, this is exactly what Russia and China are doing these days...).Or you could decide to hold treasuries and pour your savings (reserves) into "the full faith and credit" of the government issuing them. You might earn some interest (though negative interests for quality bonds are starting to gain ground around the world), but you also risk a default on the coupon... your choice !
One has to wonder if the extension is to determine the significance of the SDR at a time when the BRICS bank and AIIB are being developed. Or, are the Chinese closely working with the IMF to integrate the various organziations.
The Wizard raises the question of what created the crater at the explosion site. Why do we here little coming from the Chinese government?
Enough questions Dorthy. Only the wizard knows what goes on behind the curtain.
It's a tool to prop the dolla' and depress the rest.
That 'seat' at the IMF is only as good as the credibility of the dominant nation/s. And the United States derives its $credibility and 'dominance' from where --- Aircraft carrier battle groups...?
You mean the "full faith & credit of the Criminal Fraud UNITED STATES, CORP. INC. Slaves via The Banking Emergency Act of 1933 & birth certificates which are securitized bonds / financial instruments to pay back the debt from the Bankruptcy? Those Slaves?
That Credit?
The Bankruptcy of The United States
United States Congressional Record, March 17, 1993 Vol. 33, page H-1303
Speaker-Rep. James Traficant, Jr. (Ohio) addressing the House:
"Mr. Speaker, we are here now in chapter 11.. Members of Congress are official trustees presiding over the greatest reorganization of any Bankrupt entity in world history, the U.S. Government. We are setting forth hopefully, a blueprint for our future. There are some who say it is a coroner’s report that will lead to our demise.
It is an established fact that the United States Federal Government has been dissolved by the Emergency Banking Act, March 9, 1933, 48 Stat. 1, Public Law 89-719; declared by President Roosevelt, being bankrupt and insolvent. H.J.R. 192, 73rd Congress m session June 5, 1933 - Joint Resolution To Suspend The Gold Standard and Abrogate The Gold Clause dissolved the Sovereign Authority of the United States and the official capacities of all United States Governmental Offices, Officers, and Departments and is further evidence that the United States Federal Government exists today in name only.
The receivers of the United States Bankruptcy are the International Bankers, via the United Nations, the World Bank and the International Monetary Fund. All United States Offices, Officials, and Departments are now operating within a de facto status in name only under Emergency War Powers. With the Constitutional Republican form of Government now dissolved, the receivers of the Bankruptcy have adopted a new form of government for the United States. This new form of government is known as a Democracy, being an established Socialist/Communist order under a new governor for America. This act was instituted and established by transferring and/or placing the Office of the Secretary of Treasury to that of the Governor of the International Monetary Fund. Public Law 94-564, page 8, Section H.R. 13955 reads in part: "The U.S. Secretary of Treasury receives no compensation for representing the United States?’
Gold and silver were such a powerful money during the founding of the united states of America, that the founding fathers declared that only gold or silver coins can be "money" in America. Since gold and silver coinage were heavy and inconvenient for a lot of transactions, they were stored in banks and a claim check was issued as a money substitute. People traded their coupons as money, or "currency." Currency is not money, but a money substitute. Redeemable currency must promise to pay a dollar equivalent in gold or silver money. Federal Reserve Notes (FRNs) make no such promises, and are not "money." A Federal Reserve Note is a debt obligation of the federal United States government, not "money?’ The federal United States government and the U.S. Congress were not and have never been authorized by the Constitution for the united states of America to issue currency of any kind, but only lawful money, -gold and silver coin.
It is essential that we comprehend the distinction between real money and paper money substitute. One cannot get rich by accumulating money substitutes, one can only get deeper into debt. We the People no longer have any "money." Most Americans have not been paid any "money" for a very long time, perhaps not in their entire life. Now do you comprehend why you feel broke? Now, do you understand why you are "bankrupt," along with the rest of the country?
Federal Reserve Notes (FRNs) are unsigned checks written on a closed account. FRNs are an inflatable paper system designed to create debt through inflation (devaluation of currency). when ever there is an increase of the supply of a money substitute in the economy without a corresponding increase in the gold and silver backing, inflation occurs.
Inflation is an invisible form of taxation that irresponsible governments inflict on their citizens. The Federal Reserve Bank who controls the supply and movement of FRNs has everybody fooled. They have access to an unlimited supply of FRNs, paying only for the printing costs of what they need. FRNs are nothing more than promissory notes for U.S. Treasury securities (T-Bills) - a promise to pay the debt to the Federal Reserve Bank.
There is a fundamental difference between "paying" and "discharging" a debt. To pay a debt, you must pay with value or substance (i.e. gold, silver, barter or a commodity). With FRNs, you can only discharge a debt. You cannot pay a debt with a debt currency system. You cannot service a debt with a currency that has no backing in value or substance. No contract in Common law is valid unless it involves an exchange of "good & valuable consideration." Unpayable debt transfers power and control to the sovereign power structure that has no interest in money, law, equity or justice because they have so much wealth already.
Their lust is for power and control. Since the inception of central banking, they have controlled the fates of nations.
The Federal Reserve System is based on the Canon law and the principles of sovereignty protected in the Constitution and the Bill of Rights. In fact, the international bankers used a "Canon Law Trust" as their model, adding stock and naming it a "Joint Stock Trust." The U.S. Congress had passed a law making it illegal for any legal "person" to duplicate a "Joint Stock Trust" in 1873. The Federal Reserve Act was legislated post-facto (to 1870), although post-facto laws are strictly forbidden by the Constitution. [1:9:3]
The Federal Reserve System is a sovereign power structure separate and distinct from the federal United States government. The Federal Reserve is a maritime lender, and/or maritime insurance underwriter to the federal United States operating exclusively under Admiralty/Maritime law. The lender or underwriter bears the risks, and the Maritime law compelling specific performance in paying the interest, or premiums are the same.
Assets of the debtor can also be hypothecated (to pledge something as a security without taking possession of it.) as security by the lender or underwriter. The Federal Reserve Act stipulated that the interest on the debt was to be paid in gold. There was no stipulation in the Federal Reserve Act for ever paying the principle.
Prior to 1913, most Americans owned clear, allodial title to property, free and clear of any liens or mortgages until the Federal Reserve Act (1913)
"Hypothecated" all property within the federal United States to the Board of Governors of the Federal Reserve, -in which the Trustees (stockholders) held legal title. The U.S. citizen (tenant, franchisee) was registered as a "beneficiary" of the trust via his/her birth certificate. In 1933, the federal United States hypothecated all of the present and future properties, assets and labor of their "subjects," the 14th Amendment U.S. citizen, to the Federal Reserve System.
In return, the Federal Reserve System agreed to extend the federal United States corporation all the credit "money substitute" it needed. Like any other debtor, the federal United States government had to assign collateral and security to their creditors as a condition of the loan. Since the federal United States didn’t have any assets, they assigned the private property of their "economic slaves", the U.S. citizens as collateral against the unpayable federal debt. They also pledged the unincorporated federal territories, national parks forests, birth certificates, and nonprofit organizations, as collateral against the federal debt. All has already been transferred as payment to the international bankers.
Unwittingly, America has returned to its pre-American Revolution, feudal roots whereby all land is held by a sovereign and the common people had no rights to hold allodial title to property. Once again, We the People are the tenants and sharecroppers renting our own property from a Sovereign in the guise of the Federal Reserve Bank. We the people have exchanged one master for another.
This has been going on for over eighty years without the "informed knowledge" of the American people, without a voice protesting loud enough. Now it’s easy to grasp why America is fundamentally bankrupt.
Why don’t more people own their properties outright?
Why are 90% of Americans mortgaged to the hilt and have little or no assets after all debts and liabilities have been paid? Why does it feel like you are working harder and harder and getting less and less?
We are reaping what has been sown, and the results of our harvest is a painful bankruptcy, and a foreclosure on American property, precious liberties, and a way of life. Few of our elected representatives in Washington, D.C. have dared to tell the truth. The federal United States is bankrupt. Our children will inherit this unpayable debt, and the tyranny to enforce paying it.
America has become completely bankrupt in world leadership, financial credit and its reputation for courage, vision and human rights. This is an undeclared economic war, bankruptcy, and economic slavery of the most corrupt order! Wake up America! Take back your Country."
How's the bearing businees in Peru?
Estable, gracias a Dios.
Ojala que sigue asi.
A year in these kinds of markets..
It might as well be a decade.
A lot of time to think up a false flag too.
Yep. http://www.thedailysheeple.com/japan-allows-military-to-fight-for-the-fi...
The chart is misleading... Neither PBOC nor the IMF turns on a dime, and PBOC knew in advance of the date of the meeting. The timing (to me) looks more like PBOC was moving to deliberately keep their devaluation option on the table, after the earlier "delay" trial baloon.
I had a convertible once. Damned thing leaked like a sieve. A metaphor for the SDR?
Cocksucker
-Wu
Wu ? who ?
Cocksucka
What with all that China has done in terms of geo-political 'infrastructure building' over the past few years, what is SDR inclusion but 'window-dressing' for China...? Secondly - and perhaps even more important, ~if~ China has the gold that many seem to think it has (including myself), what does China even need the IMF or the SDR, for...?
The alternative is far worse.War.
Judging by their actions they knew no seat at the table will ever be forthcoming.
They tried anyway.
One year= never, and they know it.
Agreed. Regardless the viability of the SDR in short or long run, this is a personal rebuke, and Team PRC is not going to like this, the only question left to answer is what kind of retaliation comes first?
Prepare for outages and flash crashes acorss all the markets....now the game gets real...
"RUN CHARLEY!!"
Bond dumping.Revealing their true gold holdings,the only currency in war,
would be stupid anytime in the near future.Thats a secret way above launch codes, for a
good reason.
I think they'll be picking up the pace where they can.
I think the scat could be hitting for real pretty doggone quick.
++ WC
The 'real' weapon is gold and the credibility of a nation by extension.
C-> agree in general. I think China plans to depeg, having seat a IMF May gain them a bit more acceptance with some countries outside the current BRICS influence.
This decision by IMF, is more like we are not done funding wars and stealing yet....give us a year. This sounds like some rich folks buying time to exit a dying system...granted my speculation.
Not About China's finances.
http://redefininggod.com/2015/08/globalist-agenda-watch-2015-update-67-a...
Total Bollocks
They know a shit storm is comming...................extend and pretend..................bet they extend again in sept 2016
They need to fully float the Yuan to make the IMF happy. Of course we would have a BIG currency war then.....
Plus, a half hour later you are poor again...!
Sum Ting Wong?
Ho Li Fuk
IMF is totally dominated by the US. Was that any surprise? The US dollar is so perfect for the SDR as it is backed by $210 trillion in US debt.
In reality we're facing a fiscal gap of $210 trillion, Kotlikoff proclaimed. That's 16 times larger than official U.S. debt, "which indicates precisely how useless official debt is for understanding our nation’s true fiscal position," he noted, and almost 12 times the current GDP of $18 trillion.
http://www.newsmax.com/Finance/StreetTalk/Kotlikoff-GDP-debt-deficit/201...
The IMF Itself Is a Criminal Organization
To understand this story, you have to reel back to the birth of the IMF. In 1944, the countries that were poised to win the Second World War gathered in a hotel in rural New Hampshire to divvy up the spoils. With a few honourable exceptions, like the great British economist John Maynard Keynes, the negotiators were determined to do one thing. They wanted to build a global financial system that ensured they received the lion's share of the planet's money and resources. They set up a series of institutions designed for that purpose – and so the IMF was delivered into the world.
The IMF’s official job sounds simple and attractive. It is supposedly there to ensure poor countries don’t fall into debt, and if they do, to lift them out with loans and economic expertise. It is presented as the poor world’s best friend and guardian. But beyond the rhetoric, the IMF was designed to be dominated by a handful of rich countries – and, more specifically, by their bankers and financial speculators. The IMF works in their interests, every step of the way.
http://www.realclearworld.com/2011/06/03/the_imf_itself_is_a_criminal_or...
''As the Bretton Woods Project points out, emerging nations with large real economies and small financial sectors were the countries which best weathered the economic crisis, which was caused by advanced economies with large financial sectors(9). Like the modern opium war it waged in the 1980s and 1990s – when it forced Asian countries to liberalise their currencies, permitting western financial speculators to attack them(10) – the IMF’s prescriptions are incomprehensible until they are understood as instruments of financial power.
Decolonisation did not take place until the former colonial powers and the empires of capital on whose behalf they operated had established other means of retaining control. Some, like the IMF and World Bank, have remained almost unchanged.''
http://www.monbiot.com/2012/04/30/empire-of-capital/
Yawn.
Who is the IMF, God?
No.
Tell the Master Race to shove it.
IMF apes.
Definitely doesn't have to do with the BRICS international bank.
if China thinks that the MoneyChanger sociopaths who run this debt based currency paradigm r going to play nice in this sandbox then Confucious be Confused.....
drop the Gold hammer mother fuckers or keep getting the GAS FACE.....
BINGO!!! Good call, KS
Problem is, all of society's "winners" are the same, and all "winners" have aligned with, sold out to, and suck up to the new Rome. It will take a lot, and I mean a whole lot, to get these head-of-the-class types to turn on The new Rome that way. All of their wealth is tied up in dollar-denominated assets, for one.
Remember, until the end when he died of plague, after betrayal on top of betrayal and insult on top of insult, all Alaric wanted was inclusion. He did not want to destroy Rome, he just wanted to take his place in it.
No control-freak government, especially China's, is going to willingly tie it's hands with a gold-backed currency, and to the Chinese elite and all the rest of the Barbarian chieftains, the whole point is the good life within the Anglo-American financial system.
In fact, I can imagine the U.S. and China going to war with each side giving the other a list of populations beforehand they would like to see slaughtered.
Expect more dumping of treasuries and monthly announcements of increases in their official gold holdings...
Yes Hugo Salinas Price and McCleod think a gold backed yuan
http://usawatchdog.com/beginning-of-a-breakdown-in-international-trade-h...
Jeff Nielsen says it's gold war in retaliation for stealing the gold of average Indian farmers and that China intends to buy all the phys that is stolen from India.
http://bullionbullscanada.com/index.php/bulletin-boards/12-gold-silver-t...
heads up folks- that usawatchdog interview is a WINNER. listened to it last night. amazing, not so much for just what is said, but for what remains unsaid .... i felt llike a fucking genius reading between the lines. i will listen again to see if it was just the black vevet and the puff thinking for me, but sheesh, that was good listening last night.
the short of what i was grocking.... hugo doesn't "want" a gold backed yuan- he's sugesting it for their health.
and the same for us... let the price ofgold go to its unmanipulated free market price. the 40% devaluation is
coming to everyone, like it or not, otherwise it will be a 100% devaluation for the benny bucks. and evidently the
bowers that pee want it that way: they'd rather have you lose all of yours and keep 40% of theirs and retain the
wide rights to continue issuing worldwide fiat credit sdr's
I was surprised, but in the other direction, listening to the interview.
wha? No SDR inclusion announced right on the heals of a big dollar move? Did someone know something I did not before it was made public? Say it ain't so.
This is point where strong debt free China crashes the global economy by switching to gold.
i LIKE THIS
http://hillaryforprison.net/
"No more talk -- We go IN...!!!"
After the slight move of Yuan which has shaken the entire world market.
Does IMF really think they are relevant to determine who's the most significant currencies after the dollar? Lol.
China is waiting for giving more fucks to the Fed-controlled IMF
"Does IMF really think they are relevant"
BINGO !!!
China is pissed off now. They're going to wheel all their gold reserves out to the middle of a huge arena and tell the world - "HERE'S OURS - NOW SHOW ME YOURS BITCHEZ!!"
I don't think they will do shit, after all they just got "Rod of God"ed. That non-nuclear blast that just happened at thier number 4 port.
Froze25 - Come on now. When the US was a manufacturing powerhouse I distinctly remembering a few large chemical plant explosions in the 70's and 80's.
Along with global decline of Western purchasing of there goods, China is going to have to add regulatory safeguards. I believe China has a lot of favorable headwinds but there going to have to eat the big shitty in the short term like the rest of us.
In the end it is king of the hill game. Who bait and switched who? That it happens as an inevitability was firmly in my mind for many years. Where that is at now is something beyond analytics (at least for me).
Part of it is people like Brandon K Smith and others in the alternative news media have been saying the yuan gets in no matter what, so the IMF had to flip the script a little. Same thing happened with the Syria invasion plans back in 2013 when everybody made a fuss and Obama backed down. The same thing happened countless times with plans to go to war with Iran during G Dub's tenure.
It is a fact that when people they don't like and wish to discredit start shouting their plans from the rooftops, they will put off the plans for awhile to avoid making that source look right and giving it credibility. I bet they've propped up the stock market way longer than they wished to for this reason, after all the whole point of the fiat debt-money game is sweet, lucrative foreclosure.
Believe me, every day Yellen wants to announce QE4 and she desperately doesn't want to raise the benchmark rate, but they just cannot bear the thought of Schiff, ZH, and so many informed laymen and self-taught Austrians with no connections being right.
SDR is basically a managed mutual fund. who the fuck cares
follow the shit on the yellow brick road: (fucked up PRC site/sorry for duplicates)
9/2010 http://www.zerohedge.com/article/us-postal-service-starts-quoting-sdr-do...
SDRs pushed thru staples will be so fucking walmarty
In response to a lawsuit filed by the APWU, the Postal Regulatory Commission (PRC) has coughed up 231 documents that shed new light on the secretive deal between Staples and the Postal Service.
Perhaps most jarring is the acknowledgement that the Staples’ deal was intended to serve as a model for transferring postal retail operations from the U.S. Postal Service to private retailers.
- See more at: http://www.apwu.org/news/web-news-article/prc-documents-shed-light-shady...
In response to a lawsuit filed by the APWU, the Postal Regulatory Commission (PRC) has coughed up 231 documents that shed new light on the secretive deal between Staples and the Postal Service.
Perhaps most jarring is the acknowledgement that the Staples’ deal was intended to serve as a model for transferring postal retail operations from the U.S. Postal Service to private retailers.
- See more at: http://www.apwu.org/news/web-news-article/prc-documents-shed-light-shady...
I think China already knew Yuan won't be included in SDR long ago. So don't give a fuck, do what they want - devalue Yuan.
I have not heard much on the topic of inclusion in the SDR and the rate at which it is included. How large an inclusion will be the next topic. A minimal inclusion will not assist China much in expanding the Yuan into the reserve currencies held by central banks. I think the IMF is buying time also to resolve the issue of the short term strength of the US dollar. The recent devaluation of the Yuan may be a strategy to seek a larger inclusion in the SDR basket at the lowest possible Yuan valuation. Should the Yuan be 10% of the basket, 5%, 1%?
The Western economies are falling apart ... but don't think about asking for access to their "elite club".