Europe’s central banks are starting to replace dollar reserves with the yuan
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Re: Europe’s central banks are starting to replace dollar reserves with the yuan
#2Well China's now the world's largest economy by PPP GDP [1] so it makes some kind of sense. I'm not sure how freely convertible the Yuan is though.
[1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
Re: Europe’s central banks are starting to replace dollar reserves with the yuan
#3A few years ago I couldn’t tell you the name of a Chinese company off the top of my head, now I can not only rattle of a list, they’re companies I’ve worked with or have significant investments in companies in the US. I also have a roster of WeChat contacts.
I also work with multiple ex-pats that fled fearing for their life due to persecution based on their religion (Falung Gong), and laugh at how freaked people are about an insignificant Trump compared to a truly vicious government.
Re: Europe’s central banks are starting to replace dollar reserves with the yuan
#4We really should up the place of Chinese in our school systems as well. Especially with Brexit in mind. There is really no reason for it to be native > English > German/French > Chinese anymore.
Re: Europe’s central banks are starting to replace dollar reserves with the yuan
#5Well China's now the world's largest economy by PPP GDP [1] so it makes some kind of sense. I'm not sure how freely convertible the Yuan is though. [1] https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)
This is not based on GDP. A big part of the USD's stability has been based on an indirect oil backing. Going back to the 70s the US in which we offered substantial benefits to oil producing nations in exchange for little more than them only selling their oil in USD, and then investing excess revenues in US securities. The petrodollar in another word. This has numerous positive effects other than what I'm mentioning here, but I want to keep this brief.
Haven't you ever wondered how it is that the US is going deeper and deeper into debt, how we increased the US Monetary Base 400% since 2008 [1] with no economic consequences, how we 'printed' (not really) trillions of dollars in quantitative easing, or more generally how now we're only paying off old debts by taking on even greater levels of new debt with no reversal anywhere in sight? If a private organization was doing that, it'd be called a Ponzi Scheme. Yet we engage in all of this with minimal to no economic consequences.
But none of this matters because the USD represents access to oil. Oil is the most in demand resource in the world. And when the price of oil is pegged to the dollar, it makes USD the most in demand currency in the world. But China recently has been making huge strides in getting nations to swap to the yuan for oil. Rather than give any links go search for 'china oil yuan' and you'll get countless articles all within the past couple of months about what China has been doing. In particular China is attempting to even get Saudi Arabia to start pegging their oil to the Yuan, which would be an enormous blow to the US. If they succeed here, it may mean that the USD will need to stand on its own weight. And at that point, we may have to answer for our own economic decisions.
Re: Europe’s central banks are starting to replace dollar reserves with the yuan
#6this is also an effect of US isolationism and America first rhetoric which also means abandoning other states, eg. Ukraine, when the US loses its influence/importance so does the dollar, meaning you can't print like crazy and export your inflation in the world.
Re: Europe’s central banks are starting to replace dollar reserves with the yuan
#7I like Japan --I think for a mid-sized country they have done well for themselves... but their representation in foreign reserves is a bit outsized.
The Yuan, given China's economic strength, has nowhere to go but up. We'll have to see how European Central banks like that in 10-20 years when they exert more influence on policy.
Re: Europe’s central banks are starting to replace dollar reserves with the yuan
#8I like Japan --I think for a mid-sized country they have done well for themselves... but their representation in foreign reserves is a bit outsized. The Yuan, given China's economic strength, has nowhere to go but up. We'll have to see how European Central banks like that in 10-20 years when they exert more influence on policy.
If they let their currency free float instead of only allowing you to borrow it using swap lines.
Re: Europe’s central banks are starting to replace dollar reserves with the yuan
#9Do yourself a favour and call it by it's name: the curreny is called Renminbi
Re: Europe’s central banks are starting to replace dollar reserves with the yuan
#10A few years ago I couldn’t tell you the name of a Chinese company off the top of my head, now I can not only rattle of a list, they’re companies I’ve worked with or have significant investments in companies in the US. I also have a roster of WeChat contacts. I also work with multiple ex-pats that fled fearing for their life due to persecution based on their religion (Falung Gong), and laugh at how freaked people are…
If it makes sense, would you please elaborate the connection between these two thoughts?