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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

#71

Post by kylell »

akhatri_aus wrote: post #60
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.

> export your inflation in the world Which country has the US exported its inflation to? Venezuela? Apologies for the tongue-in-cheek but even an economist would not be able to reconcile why there isn't really any inflation amongst the major economies.

When you print money you devalue existing money, if the holders of the existing money keep holding it, keep trusting it, the devaluation is much smaller.

The inflation if visible in asset prices, eg. a painting would sell for half a billion dollar, all these companies being evaluated at billions of dollars, now holding billions of $ as state reserve doesn't look so big anymore.

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

#72

Post by simonh »

e3b0c wrote: post #50

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 man…

It’s not really a trick. If you’re an exporting country and you sell a lot to the US, you’re going to end up with a lot of Dollars. Either that or you’re doing something very wrong.

In any case, China hasn’t been significantly manipulating its currency at least for the last decade. Such charges had some validity in the early 2000s, but that’s old news. Since then China has largely diversified its currency holdings and it’s not really an issue, see link below, but there are stil votes in China bashing.

https://www.economist.com/news/finance-and-economics/2171799...

The article below from 2 years ago on this also sheds some useful light. At the time the dollar had recently rapidly appreciated against most other currencies, but the Yuan was at that point fairly strong and then stayed stable rejecting an opportunity to depreciate along with everyone else. In hindsight the articles analysis has proved to be remarkably prescient. The European banks accumulation of Yuan is testament to the increasing credibility of the Yuan, as it predicted.

https://www.economist.com/news/finance-and-economics/2164420...

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

#73

Post by ben_w »

chvid wrote: post #56
ben_w wrote: post #40

Earlier quoted context omitted.

Religious persecution doesn’t disappear just because of economic growth. Neither does discrimination against sexual preferences (+). That’s the fear expressed above. (+) unless you limit your knowledge of sexual preferences to just gay/straight — human sexuality is much more complicated than that.

Actually it does - history is full of examples of just that. As the middle class grows in economic terms, it grows in political influence and the overall values of the society changes to accommodate that class. Introduction of democracy and women’s rights in Europe are good examples.

> Introduction of democracy and women’s rights in Europe are good examples.

Which is why I said “religious” and “sexual preference”.

Jews were widely discriminated against even a few years after WW2; Muslims are a current whipping-boy; I’m not sure if Catholic-vs-Protestant is as big a divide in Northern Ireland as it looks from the outside, but it does look big; In the USA, Atheists are almost as disliked as Muslims.

Then there’s sexual preference. You’re fine if you’re gay (finally!), but not so much if you’re into BDSM or have any fetishes more complicated than underwear. Also, I have a friend whose sexuality was previously legal, but which was outlawed in half of Europe and half of the USA this century. I invite you to guess what that might be.

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

#74

Post by maze-le »

ddnb wrote: post #52
endisukaj wrote: post #37

Earlier quoted context omitted.

In the end, the EU needs to do what it must to survive and that IMO means federalize. A united EU would not need an anchor for safety.

The very basis on which the EU is founded is cooperation, It's becoming and hopefully staying a trait that seems normal to europeans. I'd prefer cooperation over isolationist worldpowers any day.

The EU is cooperative among its members, but its economic policy towards the rest of the world is protectionism.

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

#75

Post by dogma1138 »

NicoJuicy wrote: post #64
dogma1138 wrote: post #58

Earlier quoted context omitted.

Europe can buy all the yuan in the world and it won’t have any effect. The exchange rate between the dollar and the yuan is set by the rate at which China is buying US debt not by the global markets. China prints money to buy US debt it allows China to devalue its own currency without devaluing its assets and this deal allowed the US to pretty much generate as much currency as they want through cheap debt without dev…

That's rude... Source? It's definitely not the CIA Factbook: https://www.cia.gov/library/publications/the-world-factbook/... Takeaway: EU GDP > America GDP ( don't forget, also the Euro vs USD rose since the start of 2018) ;)

The GDP of Europe is irrelevant for this scenario the monetary relationship between the dolllar and the yuan isn’t like most currencies. Until 2005 it was pegged to the dollar completely since then it’s effectively pegged to the rate at which China buys dollar bonds.

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

#76

Post by rypskar »

sarchertech wrote: post #46
eksemplar wrote: post #43

Earlier quoted context omitted.

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?

>You're on an American site No, that isn't really how the internet works. The site is owned by an American company, but HN is an international site with visitors from all around the world

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

#77

Post by sergiosgc »

maze-le wrote: post #74
ddnb wrote: post #52

Earlier quoted context omitted.

The very basis on which the EU is founded is cooperation, It's becoming and hopefully staying a trait that seems normal to europeans. I'd prefer cooperation over isolationist worldpowers any day.

The EU is cooperative among its members, but its economic policy towards the rest of the world is protectionism.

The EU is the world's largest exporter and largest importer [1]. It also the world's largest foreign investor and the world's largest recipient of foreign investment. If it were protectionist, that would hardly be possible.

[1] http://ec.europa.eu/trade/policy/eu-position-in-world-trade/

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

#78

Post by slivym »

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…

This is kind of ridiculous. The purpose of reserves is not to send political messages. It's to provide a mechanism to manage monetary policy and it does that through buying back its liabilities.

To do this effectively you must hold a strong currency as your reserve- there's no point holding Zimbabwe dollars. So any reasonable reserves for a European country today will be part Dollar, Pound, Yen and Yuan. How much of each should be proportional to how stable that currency is and how highly correlated it is to your own currency.

This is not a political message, the ECB is just neutrally moving more towards Yuan as the Chinese economy gains importance relative to the US economy. That's all. It's not a good sign for the US, but the ECB has better ways to send political messages than buying $X00m dollars or Yuan.

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

#79

Post by netheril96 »

learc83 wrote: post #54
AstralStorm wrote: post #24

Earlier quoted context omitted.

Too late. Mandarin and Chinese in general requires a slightly different way of thinking that is better and way more easily absorbed when young. 10k ideograms is not that hard compared to say 7k words needed to have basic fluency in English. You would need about twice as much to be considered reasonably fluent. Grammar is relatively easy, proper pronunciation is much more critical than in English.

10k? If I'm remembering correctly even educated Chinese people don't know that many. I'm also unaware of research showing that Chinese is comparatively better absorbed when young.

Every language is easier to learn when you are young, especially before five years young.

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

#80

Post by ksec »

xir78 wrote: post #3

A 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

Which is true. But most US citizen doesn't realize how their system, while extremely bureaucratic in nature, protect real bad things from happening.

There both have upside and downside. Only History will tell.

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