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I.M.F. Makes China’s Renminbi One of World’s Select Currencies

nytimes.com

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Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#11

Post by beamatronic »

adventured wrote: post #5
vxxzy wrote: post #2

What implications could this have for oil? Isn't oil bought and sold using US Dollars? I've always heard the World "Does Business" in US Dollars. Is this the beginning of the end for the Dollar as an international norm?

Modest implications. No more than the Euro or Yen at their peaks did. No, it's not even remotely close to the end of the dollar as the international norm. The dollar is stronger today than it has been in 20 years, and it's gaining strength as the Eurozone and Japan are a mess. The most likely outcome to this, is that the Yen loses the position it has held on the global stage for the prior 30+ years or so. Japan is th…

At the moment, 1 US Dollar equals 1.33 Canadian Dollar and 0.95 Euro.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#12

Post by chollida1 »

tomp wrote: post #8
chollida1 wrote: post #7

China had to make some concessions to get the yuan into the SDR basket. Most notably they have committed to issue 3 month T-Bills every week and to allow foreign central banks to access their currency and bond markets. Note also that this doesn't take place until October of 2016 so there should be no immediate impact on the markets. Also note the SDR has a very minor share of the global currency reserves so this is m…

> Also note the SDR has a very minor share of the global currency reserves so this is more symbolic at the moment. More (10.92%) than GBP (8.09%) and JPY (8.33%) actually.

Where do you see that SDR is 10.92% of all global currency reserves. I can't find anything that shows SDR being anywhere close to that amount.

See here:

https://en.wikipedia.org/wiki/Special_drawing_rights#Allocat...

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#13

Post by AC__ »

While you present a compelling argument, I must respectfully disagree. I may catch some flack for saying it, and many people refuse to believe it, but the U.S. is insolvent. The value of the U.S. dollar is artificially propped-up. How long do you truly believe the Russias and Chinas of the world are going to keep using greenbacks? They will feign WWIII, Israel will expand to encompass 'Greater Israel' and U.N. will formally install global government, and USD will cease to be de-facto global currency.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#14

Post by digi_owl »

vxxzy wrote: post #2

What implications could this have for oil? Isn't oil bought and sold using US Dollars? I've always heard the World "Does Business" in US Dollars. Is this the beginning of the end for the Dollar as an international norm?

The only thing that could end the (petro-)dollar would be the intro of Bankor for international trade.

Meaning that if US wanted to buy something off china, it would have to convert USD into Bankor, then buy whatever from China, that would then turn those Bankor into Renminbi (or hold them for more imports).

This would mean that a import heavy nation would find their Bankor exchange rate plummeting etc, potentially balancing out trade.

As long as the USD is the international trade currency, USA can always print to cover needs. This in contrasts to various historical death spirals where a lack of exports and a constant printing to cover foreign expenses ran the currency into the ground.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#15

Post by tomp »

chollida1 wrote: post #12
tomp wrote: post #8

Earlier quoted context omitted.

> Also note the SDR has a very minor share of the global currency reserves so this is more symbolic at the moment. More (10.92%) than GBP (8.09%) and JPY (8.33%) actually.

Where do you see that SDR is 10.92% of all global currency reserves. I can't find anything that shows SDR being anywhere close to that amount. See here: https://en.wikipedia.org/wiki/Special_drawing_rights#Allocat...

Aha, I get it. I misread your statement. I thought you were saying that CNY is a small share of SDR, not that SDR is a small share of all global reservers. My apologies.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#16

Post by dear »

acd wrote: post #6

This is how the worlds reserve currencies has looked historically. My personal guess is that the Yuan will be the next bar in the graph. http://azizonomics.com/2012/01/04/a-history-of-reserve-curre...

I think Gold was the 'global reserve currency' before the 20th century.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#17

Post by Rmilb »

acd wrote: post #6

This is how the worlds reserve currencies has looked historically. My personal guess is that the Yuan will be the next bar in the graph. http://azizonomics.com/2012/01/04/a-history-of-reserve-curre...

What advantages does the Yuan have over the USD? I think the next generation will value the transparency and predictability of issuance of a crypto currency similar to bitcoin has far greater advantages. Which doesn't mean that central bankers will be in favor of it. But it has a 'long shot' at getting on that graph.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#18

Post by AC__ »

AC__ wrote: post #13

While you present a compelling argument, I must respectfully disagree. I may catch some flack for saying it, and many people refuse to believe it, but the U.S. is insolvent. The value of the U.S. dollar is artificially propped-up. How long do you truly believe the Russias and Chinas of the world are going to keep using greenbacks? They will feign WWIII, Israel will expand to encompass 'Greater Israel' and U.N. will f…

Downvote, but in a year or two remember atodaso lol https://www.pinterest.com/pin/264164334368722823/

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#19

Post by adventured »

the-dude wrote: post #9
adventured wrote: post #5

Earlier quoted context omitted.

Modest implications. No more than the Euro or Yen at their peaks did. No, it's not even remotely close to the end of the dollar as the international norm. The dollar is stronger today than it has been in 20 years, and it's gaining strength as the Eurozone and Japan are a mess. The most likely outcome to this, is that the Yen loses the position it has held on the global stage for the prior 30+ years or so. Japan is th…

> The dollar is stronger today than it has been in 20 > years As far as I remember the US Dollar was about 1.25 the value of the Euro at it's peak in 1999/2000. We traded in dollars at the time.

The Yen was a credible currency in 1995, and it's now in much worse shape (both today and its outlook). The Euro was widely expected to pose a challenge to the dollar globally, which has not happened at all.

The dollar is as strong as it is even with 0% interest rates. Imagine if rates were even half the levels they were 20 years ago. I'd definitely make the argument the dollar is stronger today than it has been since the late 1990s when the US economy was riding very high.

In the next few years, most likely the dollar will gain more strength (the US budget is currently under control, growth is ok, and the employment picture continues to strengthen spurring tax growth), the Euro will be debased with more QE in mostly futile attempts to spur Eurozone growth, and the Yen will lose a lot more value. The Yuan is also likely to face significant devaluation as China struggles to grow in real terms, but it will at least see greater global share. Things are looking great for the dollar at least for the next ten years.

Re: I.M.F. Makes China’s Renminbi One of World’s Select Currencies

#20

Post by mikeash »

chimeracoder wrote: post #10
acd wrote: post #6

This is how the worlds reserve currencies has looked historically. My personal guess is that the Yuan will be the next bar in the graph. http://azizonomics.com/2012/01/04/a-history-of-reserve-curre...

I'm more than a bit skeptical of anything pre-1750 in that graph, because the "world's" reserve currency means something very different in today's global economy than what that graph appears to be using to define them. Those might pass for European reserve currencies in a pre-Industrial Era, but they certainly do not reflect the world economy of the time period by any means. In addition to all of that, the USD is the…

Wouldn't the gold standard render the entire notion of a "reserve currency" meaningless, too? If you're holding a gold-backed currency then you're effectively just holding gold. Holding a currency as a "reserve currency" probably meant actually holding a bunch of gold in a vault. It hardly matters whose face was on it.
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