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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

#41

Post by kuschku »

mtgx wrote: post #30
kylell wrote: post #6

this 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.

It's only a shame that it has to be a country like China that rises up at US' expense, rather than say Switzerland, Germany, Sweden, etc. What happens to global human rights when it's China that has an oversized influence on world politics and when countries start easily accepting extraditions to China (say for criticizing the Chinese leader, which could be a crime there), and many other outcomes like that? US' track…

We only have ourselves to blame for that. Had we actually created a federal Europe, we would have been the ones profiting off of this.

Now, instead, it's China, and we're still not getting anywhere.

Re: Europe’s central banks are starting to replace dollar reserves with the yuan

#42

Post by valesco »

tim333 wrote: post #12
indubitable wrote: post #5

Earlier quoted context omitted.

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 h…

I not convinced oil is that big a deal these days. The US kind of owns huge swathes of the world economy - tech - facebook, google apple etc, fast food and drink - coke, pepsi, McD, places to stay - Hilton, Sheraton, airbnb and so on. Typed in Bangkok on an Apple while drinking coffee paid for on MasterCard while waiting to fly on a Boeing. So people will lend to the US as it had a lot of income, assets and a reputat…

But oil is the infrastructure of all of this. Oil in the US has that structural role plus the good (financial) reputation of its country.

Re: Europe’s central banks are starting to replace dollar reserves with the yuan

#43

Post by eksemplar »

sarchertech wrote: post #22
eksemplar wrote: post #4

We 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.

Chinese is many times harder to learn than the other languages you mentioned for Native English speakers. It takes about 4 times as long as French and Spanish to become proficient. Given the amount of time kids spend on foreign languages in school, there's no way they're learning enough Mandarin to be useful. I took Mandarin as an undergrad, and I can understand more Spanish despite having never studied it.

We’re not native English speakers, English is our second/third language.

Chinese is also already available in our schools. It’s just not a high priority. It’s on par with Spanish, Greek, Russian, Japanese and some such. This doesn’t correlate to the importance Chinese has on our society these days though.

English used to be the most important language, these days it’s German and Chinese and I see nothing on the horizon to change that outlook, so it’s kind of silly to weigh it’s importance in our school system as low as Korean or Greek.

I realize it’s harder to learn, but that’s what schools are for. I mean, when I was young we didn’t teach English until the 4th grade, these days we start teaching English by age 6 and everyone learns 3-4 languages.

Re: Europe’s central banks are starting to replace dollar reserves with the yuan

#44

Post by indubitable »

tim333 wrote: post #12
indubitable wrote: post #5

Earlier quoted context omitted.

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 h…

I not convinced oil is that big a deal these days. The US kind of owns huge swathes of the world economy - tech - facebook, google apple etc, fast food and drink - coke, pepsi, McD, places to stay - Hilton, Sheraton, airbnb and so on. Typed in Bangkok on an Apple while drinking coffee paid for on MasterCard while waiting to fly on a Boeing. So people will lend to the US as it had a lot of income, assets and a reputat…

Oddly enough in society the relevance of a resource and its cost are often quite detached. Imagine Facebook/Google/Apple/Coke/etc all shut their doors, never to open again, tomorrow. There'd be no particularly dramatic change in society.

By contrast, imagine all oil producing nations suddenly stopped exporting any oil tomorrow. Once domestic reserves of countries ran out the entire world would grind to an incredibly rapid halt. Electricity, transportation, shipping, and everything would stutter and then come to a near complete stop. And society itself would likely break down in very short order. It's not about the dollar value of oil, but about its relevance to society. You'd think those two would be strongly correlated, but they're not.

This is why oil and the petro-dollar have so much inherent value. Without oil society collapses, and USD is the gateway to oil. That 'is' may be changing to 'was.'

Re: Europe’s central banks are starting to replace dollar reserves with the yuan

#45

Post by yorwba »

sarchertech wrote: post #22
eksemplar wrote: post #4

We 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.

Chinese is many times harder to learn than the other languages you mentioned for Native English speakers. It takes about 4 times as long as French and Spanish to become proficient. Given the amount of time kids spend on foreign languages in school, there's no way they're learning enough Mandarin to be useful. I took Mandarin as an undergrad, and I can understand more Spanish despite having never studied it.

You can absolutely learn enough Mandarin to be useful in 2 years of weekly classes.

Source: That was my level when I went to China. I felt not at all ready, but then I discovered that my limited knowledge could get me quite far with a little effort.

Re: Europe’s central banks are starting to replace dollar reserves with the yuan

#46

Post by sarchertech »

eksemplar wrote: post #43
sarchertech wrote: post #22

Earlier quoted context omitted.

Chinese is many times harder to learn than the other languages you mentioned for Native English speakers. It takes about 4 times as long as French and Spanish to become proficient. Given the amount of time kids spend on foreign languages in school, there's no way they're learning enough Mandarin to be useful. I took Mandarin as an undergrad, and I can understand more Spanish despite having never studied it.

We’re not native English speakers, English is our second/third language. Chinese is also already available in our schools. It’s just not a high priority. It’s on par with Spanish, Greek, Russian, Japanese and some such. This doesn’t correlate to the importance Chinese has on our society these days though. English used to be the most important language, these days it’s German and Chinese and I see nothing on the horiz…

You've not mentioned where you're from.

You're on an American site, and you talked about Brexit, so I assumed British or American.

>English used to be the most important language, these days it’s German and Chinese

I'm having a very hard time thinking of a country where both German and Chinese are more important than English. Where is this?

Re: Europe’s central banks are starting to replace dollar reserves with the yuan

#47

Post by foepys »

sremani wrote: post #33

>>In June, the European Central Bank announced that it had exchanged €500 million ($611 million) worth of US dollar reserves into yuan securities. This was a small shift—the ECB has €44 billion in foreign exchange reserves Before declaring fall of USA, blaming Trump for apocalypse and anointing Xi as the new Emperor, lets take step and really see the numbers. $611 million is a marginal amount when we are talking abou…

I don't see anything passive aggressive in this. America's foreign policy is being criticized openly and showing that other countries don't necessarily only need the US-Dollar is an extension of that.

Re: Europe’s central banks are starting to replace dollar reserves with the yuan

#48

Post by cinquemb »

indubitable wrote: post #5
tim333 wrote: post #2

Well 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 h…

>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.

Until people around the world can speculate freely on the yuan, and yuan denominated futures like people can with QA and CL, I don't see this having much impact.

Speculators will make up most of the daily volumes, and most never want to take physical delivery of the "gold convertibility" yuan denominated oil futures on expiry, and most certainly want to be able to take their profits out of the yuan to whatever asset of their choosing. Without the the yuan floating, this will be a relatively non liquid market.

>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.

Yeah, I don't see the Saudi's buying Chinese weapons and US weapons without the US giving it's approval [0], because they certainly don't have the same capacity as the US for their citizens buying Chinese goods.

If the EU was actually serious about more trade with China, they should drop a lot of the anti dumping restrictions they have now on trade ;)

[0] https://foreignpolicy.com/2014/01/30/why-did-saudi-arabia-bu...

Re: Europe’s central banks are starting to replace dollar reserves with the yuan

#49

Post by foepys »

kuschku wrote: post #41
mtgx wrote: post #30

Earlier quoted context omitted.

It's only a shame that it has to be a country like China that rises up at US' expense, rather than say Switzerland, Germany, Sweden, etc. What happens to global human rights when it's China that has an oversized influence on world politics and when countries start easily accepting extraditions to China (say for criticizing the Chinese leader, which could be a crime there), and many other outcomes like that? US' track…

We only have ourselves to blame for that. Had we actually created a federal Europe, we would have been the ones profiting off of this. Now, instead, it's China, and we're still not getting anywhere.

You cannot just "create" a federal Europe. This naive view is why the Middle East is in a constant state of looming (civil) war. British and French colonists drew state lines without considering tribes and cultures and now those tribes are fighting over control in countries they don't even want to be a part of.

Re: Europe’s central banks are starting to replace dollar reserves with the yuan

#50

Post by e3b0c »

I think people have to understand the origin of the dollar reserves before imagining the implication. In the cases of Chinese and Japan (and most other export-oriented economies), the accumulations of dollar reserves are the by-product of the exchange rate manipulations, which are to make their currencies undervalued to maintain the export competitiveness.

The US dollar has been the 'target' of such exchange rate manipulation is mostly because of its role as the largest import economy. As a result, if China becomes the next big importer, other export-oriented countries will probably do the same trick like it has been doing to the US.

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