In the previous post we examined how the recent US elections are likely to stall out IMF reforms for a long time (unless another financial crisis arises suddenly). This will not deter China. They will continue to work slowly and surely towards a Yuan that can challenge the US dollar as sole global reserve currency. Here are several articles on what China is up to lately. First some quotes, then some comments.
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"Ottawa and Beijing have struck a deal that will see this country designated as a trading hub for China’s yuan currency, a benefit that will lower the cost of doing business for Canadian companies seeking Chinese markets."
"The hub, a financial centre sanctioned by China to clear and settle transactions in the Chinese currency, would likely be based in Toronto, sources say."
"Chinese companies prefer transacting in their own currency. Otherwise they have to convert their transactions into U.S. dollars, and then “re-convert” back in China."
"A yuan trading hub has the financial infrastructure for settlement and clearing, and sufficient liquidity to handle large transactions at a stable and predictable exchange rate."
"Some countries are already using the Chinese yuan in their foreign-currency reserves without announcing it publicly, central bank governor Zhou Xiaochuan said."
"While China’s yuan has begun to be used as a reserve currency for several years, some countries “may not be willing to say so,” Zhou told Bloomberg on the sidelines of the International Monetary Fund meetings in Washington."
“Some homework” remains for China to do to promote its currency globally, including making the yuan freely convertible in a gradual manner, and furthering efforts to “respect market demand and supply and maintain financial stability,” according to Zhou."
"China has set up bilateral currency swap lines with more than 20 countries and regions since 2009, including Switzerland, Brazil, Hong Kong, Indonesia and South Korea, the Xinhua News Agency reported in July."
"The inclusion of yuan in the currency basket of Special Drawing Rights, or SDR, the IMF’s unit of account, will happen when conditions are right, PBOC deputy governor Yi Gang said yesterday in Washington. “A canal is formed when water comes,” Yi said, using a Chinese idiom. The basket currently is made up of the dollar, euro, pound and yen."
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