Wednesday, July 22, 2015

Financial Times: Time to Transform the World's Currency System

The IMF will do its review of the SDR currency basket this fall. All eyes are watching to see if they will add the Yuan/Renminbi to the basket. But there are those who think that other currencies might be considered as well. This article in the Financial Times suggests at least two others should be considered. Below are some quotes.


The pending International Monetary Fund review of special drawing rights is much more than a rejigging of a currency basket, or a decision on whether or not the Chinese renminbi will be included. It is about whether the IMF is willing to take serious steps towards the transformation of the international monetary system. It will matter greatly for the interplay of currencies and for financial markets.

The SDR is an international reserve asset and it gives countries the right to exchange SDRs for freely usable currencies to supplement their international reserve holdings. The SDR is denominated as a basket of four currencies, the dollar, euro, pound and yen.


Added note: Tomorrow we will take time for a mid summer review to see where things stand in regards to the two big questions we are following here on the blog. This fall we can expect some significant news on several fronts, but the rest of the summer is looking like it may be mostly uneventful. If things do stay slow, I will re-post some of the more popular articles from the last few weeks to give new readers a better chance to find them.

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