China positioning its currency for a run at world supremacy

[jiimbergin]

http://www.latimes.com/business/la-f...,1808437.story


"In a series of what might be called baby steps, Chinese officials recently have moved to globalize the yuan and promote its influence overseas, with Shanghai designated as command central.

Since last December, China has signed deals with six countries, including South Korea, Malaysia and most recently Argentina, for currency swaps that would inject Chinese money into foreign banking systems. That would allow foreign companies to pay for goods they import from China in yuan, bypassing the dollar -- the currency that dominates international trade and finance, including foreign exchange reserves.

Beijing is also taking initiatives to use the yuan, also known as the renminbi, to settle trade accounts between some Chinese provinces and neighboring states, starting with Hong Kong.


"The central bank has set promoting the renminbi for payment settlements as the main task for this year's work," said Shi Lei, an analyst in the global financial markets section at Bank of China in Beijing."

Just one more step on the road to devaluing the dollar.

jim

[Mega]

Re: China positioning its currency for a run at world supremacy

Thanks for posting that Jim, Its coming.

Mike

[The Outback Oracle]

Re: China positioning its currency for a run at world supremacy

I imagine Australia woth its Chinaphile PM, and huge trade volumes with China might be into this. Speaking as a small importer here, it would certainly make my trade with China much simpler.
I wonder about the resultant loss of revenue to the US Banks in this. I think it could be massive. Every transfer of money currently goes through the USA!!!! A wee commission is charged every time. In future it won't happen!

[ThePythonicCow]

Re: China positioning its currency for a run at world supremacy

I wonder about the resultant loss of revenue to the US Banks in this. I think it could be massive.

Lordy, matie - who's still going to be paying us Damn Yankees to keep the world safe for Democracy :rolleyes:?

[jk]

Re: China positioning its currency for a run at world supremacy

the yuan needs to be fully convertible before anyone can take it seriously as a global currency. "baby steps," indeed.

[GRG55]

Re: China positioning its currency for a run at world supremacy

the yuan needs to be fully convertible before anyone can take it seriously as a global currency. "baby steps," indeed.

Great new avatar jk!

[jk]

Re: China positioning its currency for a run at world supremacy

Great new avatar jk!

certainly;)

[touchring]

Re: China positioning its currency for a run at world supremacy

the yuan needs to be fully convertible before anyone can take it seriously as a global currency. "baby steps," indeed.

How do you protect your US dollar assets against devaluation without gathering more junk along the way?

One one hand, China wants to protect their dollar assets while on the other hand they don't want to throw in more good money after bad.

A practical move given that they have no other choices.

[Ted Q. Sipp]

Re: China positioning its currency for a run at world supremacy

Krugman had a pretty good piece on this. China is coming but they are just as screwed as the rest of us.

http://www.nytimes.com/2009/04/03/op...03krugman.html

[medved]

Re: China positioning its currency for a run at world supremacy

http://www.latimes.com/business/la-f...,1808437.story


"In a series of what might be called baby steps, Chinese officials recently have moved to globalize the yuan and promote its influence overseas, with Shanghai designated as command central.

Since last December, China has signed deals with six countries, including South Korea, Malaysia and most recently Argentina, for currency swaps that would inject Chinese money into foreign banking systems. That would allow foreign companies to pay for goods they import from China in yuan, bypassing the dollar -- the currency that dominates international trade and finance, including foreign exchange reserves.

Beijing is also taking initiatives to use the yuan, also known as the renminbi, to settle trade accounts between some Chinese provinces and neighboring states, starting with Hong Kong.


"The central bank has set promoting the renminbi for payment settlements as the main task for this year's work," said Shi Lei, an analyst in the global financial markets section at Bank of China in Beijing."

Just one more step on the road to devaluing the dollar.

jim

“It [US dollar] is the reserve currency because it is the currency central bankers around the world chose to buy faute de mieux after a previous American administration, weakened by war (Vietnam that time) and rising oil prices, abandoned the gold standard. And there has been no bigger, entirely voluntary, buyer of dollars recently than Mr Zhou and the People's Bank.”

http://blogs.telegraph.co.uk/richard..._china_koolaid

It seems, everybody is waiting for the $US crash, just like nobody is visiting crowded restaurants. For this reason alone the crash will not happen, and therefore no major changes will be made in the currency system. When things settle, China will be pulled into more participation in the new currency system and $US will be gradually devalued (Plaza Accord II). There will be some currency basket supported by the bankster consensus and the good old (or bad old for US-haters) USA will still play dominant role in its management. Consequently there will be no $US hyperinflation.

New reserve currency: yes (basket, not Yuan).
$US crash: no.
$US controlled devaluation: yes.
US high inflation: yes.
US hyperinflation: no.
Gold bubble: probably (depends on banksters’ international cooperation a-la London gold pool).

[metalman]

Re: China positioning its currency for a run at world supremacy

“It [US dollar] is the reserve currency because it is the currency central bankers around the world chose to buy faute de mieux after a previous American administration, weakened by war (Vietnam that time) and rising oil prices, abandoned the gold standard. And there has been no bigger, entirely voluntary, buyer of dollars recently than Mr Zhou and the People's Bank.”

http://blogs.telegraph.co.uk/richard..._china_koolaid

It seems, everybody is waiting for the $US crash, just like nobody is visiting crowded restaurants. For this reason alone the crash will not happen, and therefore no major changes will be made in the currency system. When things settle, China will be pulled into more participation in the new currency system and $US will be gradually devalued (Plaza Accord II). There will be some currency basket supported by the bankster consensus and the good old (or bad old for US-haters) USA will still play dominant role in its management. Consequently there will be no $US hyperinflation.

New reserve currency: yes (basket, not Yuan).
$US crash: no.
$US controlled devaluation: yes.
US high inflation: yes.
US hyperinflation: no.
Gold bubble: probably (depends on banksters’ international cooperation a-la London gold pool).

a succinct summary of itulip philosophy. new evidence to support it...

Fed announces credit lines with 4 central banks

WASHINGTON (AP) -- The Federal Reserve said Monday it has expanded credit lines with the central banks of Japan, Switzerland, the United Kingdom and European Union that will provide foreign currency to U.S. banks -- if needed.

Under currency swap arrangements, which were common last fall when the credit crisis intensified, the Fed provides dollars in exchange for reserves of the other nations' currencies.

"Should the need arise, euro, yen, sterling and Swiss francs would be provided to the Federal Reserve via these additional swap agreements with the relevant central banks," according to the Fed release. "Central banks continue to work together and are taking steps as appropriate to foster stability in global financial markets."

The Fed said the expanded credit lines, authorized through Oct. 30, are worth the equivalent of up to $45 billion with the Bank of England, $108 billion with the European Central Bank, $99 billion with the Bank of Japan and $35 billion with the Swiss National Bank

Separately, the Fed said it will auction off $150 billion in short-term loans to nonbanks and other financial institutions under a program that began last year. The auctions provide loans to those institutions on similar terms that the central bank provides to banks, and are intended to stabilize the U.S. financial system.

[c1ue]

Re: China positioning its currency for a run at world supremacy

Medved,

Your position is interesting, but the first Plaza accord was anything but gradual.

Secondly I still do not see how the rest of the world continues to fund a US which is increasing its borrowing needs, not decreasing.

Or are you saying that Obama is 'one and done' with his present stimulus and bank bailout (and Fed Treasury buying) package?

[medved]

Re: China positioning its currency for a run at world supremacy

Medved, Your position is interesting, but the first Plaza accord was anything but gradual.

It was more gradual than FDR’s devaluation. Third time’s a charm, hopefully this one will be even more gradual (yet more gov’t control, than Plaza Accord I ). If this bet is wrong, we go hyper, not just inflate.

Secondly I still do not see how the rest of the world continues to fund a US which is increasing its borrowing needs, not decreasing.

The same way they were doing it before. Politicians will try to preserve status-quo no matter what. What’s the alternative? Create their own totally new international currency and manage it by themselves? This is no better, than Euro.

They have totally given up on the debt-based money. We have government-based money no matter what Western government you are talking about. They have faith in The Government Money saving them (which is, of course, just as ridiculous as debt-based money). From this faith there is only a small step towards letting the biggest and strongest Western gov’t manage this process. G20 will definitely have more say in the Plaza Accord II, than US vassals had in the PA I, and the US will have less freedom and pay a higher price, but that’s about it. I know, Obama is The Lord Of Change, but, in reality even he does not want drastic and quick changes. Neither do his allies and creditors.

Of course, I prefer to hedge my bets and keep in mind, even best-laid plans go wrong. So, yes, go shopping to the neighborhood mall, but not too far from your bunkers.

[c1ue]

Re: China positioning its currency for a run at world supremacy

Medved,

I agree - this latest Obama spending 'plan' is a pass/fail with fail being hyperinflation.

I'm not so sure I agree about the rest of the world.

Right now a lot of nations are finding out the price of their 'protection' under the US: Taiwan, Japan, Ukraine, Georgia, etc

The small nations have no choice and will probably continue.

But the larger nations including Germany, Russia, and China don't seem to be reading the same set of options.

The latest Stratfor silliness is very indicative of US thinking: even though Germany in particular and old EU in general oppose Turkey entering the EU anytime soon, and Turkey furthermore is in a fairly precarious position with a belligerent Iran, a Kurdish safe haven in Iraq, and a historical rival in Russia, somehow Obama's spending lots of time with Turkey is seen as a sign of US strength.

Hah!