TaiShang
ELITE MEMBER
- Joined
- Apr 30, 2014
- Messages
- 27,848
- Reaction score
- 70
- Country
- Location
New report suggests including Yuan as global currency will aid world economy - National Finance Examiner | Examiner.com
In a new report out on June 30 through the collective works of Atlantic Council's C. Boyden Gray Fellow on Global Finance and Growth, Chris Brummer, and sponsored jointly by the City of London Corporation, Standard Chartered and Thomson Reuters, the potential of internationalizing the Yuan and bringing it into the global spectrum as an equal reserve currency has the possibility of aiding the world economy and in resolving some of the financial problems that exist from having a singular reserve through the U.S. dollar.
For more than 40 years the world has run on a singular monetary system where all currencies and commodities are priced in relation to the U.S. dollar. This uni-polar system has caused extreme wealth disparity between rich and poor nations, and has even led to social and civil unrest as inflation has driven people to be unable to afford even the most basic of necessities (Arab Spring). And while the most optimal solution would be to go back to a gold or silver based reserve system, having an additional currency like the Yuan to go with the dollar could be an added bonus, especially for emerging markets in the East.
The internationalization of Chinese currency yuan, or renminbi, along with a more open capital account, will rebalance the global economy for more sustainable growth, said a report published on Monday.
The internationalization of renminbi will also facilitate a more competitive, consumer-oriented economy in China, while firms and investors in the United States and Europe will enjoy new means of diversifying their portfolio investments, as will China's savers, the report found.
The report, entitled "Renminbi Ascending: How China's Currency Impacts Global Markets, Foreign Policy and Transatlantic Financial Regulation", was developed by Atlantic Council's C. Boyden Gray Fellow on Global Finance and Growth, Chris Brummer, and sponsored jointly by the City of London Corporation, Standard Chartered and Thomson Reuters.
"Renminbi internationalisation is an unprecedented financial event that is irrevocably changing the global market, and presenting an enormous opportunity for both Chinese and the world's business to trade and invest," said Mark Boleat, Policy Chairman at the City of London Corporation. - China Daily
The Yuan, or RMB has been pegged to the dollar since 1994, and that relationship has been used to turn the tables on global import/export ratios, especially after the U.S. signed NAFTA that same year. And while both countries have an extraordinarily high level of debt in their banking system and economies, the biggest difference currently is that much of America's debt resides outside the U.S., and in the hands of foreigners while China's debt is entirely internal, and is much easier to dissolve if necessary should a liquidity or inflationary crisis one day emerge.
The rise of the Yuan is already taking place, with currency swap lines having been created in over 23 major economies, and a bond market having been established in the City of London. And with the opening of the AIIB earlier this year, the probability of China taking over many of the West's former financial platforms makes bringing in the Yuan as a joint reserve currency more beneficial sooner rather than later.
As the IMF currently works with China to include the Yuan in the basket of currencies that support the SDR, and with over 12% of global trade already being done using the RMB, the emergence of the Yuan as a de facto global reserve is right now taking place. And the reality of accepting the Yuan officially as such would be better for the rest of the world, otherwise the alternative will be the clash of two competitive reserve currencies fighting it out for global supremacy, which will benefit no one when one of the two eventually falls.
In a new report out on June 30 through the collective works of Atlantic Council's C. Boyden Gray Fellow on Global Finance and Growth, Chris Brummer, and sponsored jointly by the City of London Corporation, Standard Chartered and Thomson Reuters, the potential of internationalizing the Yuan and bringing it into the global spectrum as an equal reserve currency has the possibility of aiding the world economy and in resolving some of the financial problems that exist from having a singular reserve through the U.S. dollar.
For more than 40 years the world has run on a singular monetary system where all currencies and commodities are priced in relation to the U.S. dollar. This uni-polar system has caused extreme wealth disparity between rich and poor nations, and has even led to social and civil unrest as inflation has driven people to be unable to afford even the most basic of necessities (Arab Spring). And while the most optimal solution would be to go back to a gold or silver based reserve system, having an additional currency like the Yuan to go with the dollar could be an added bonus, especially for emerging markets in the East.
The internationalization of Chinese currency yuan, or renminbi, along with a more open capital account, will rebalance the global economy for more sustainable growth, said a report published on Monday.
The internationalization of renminbi will also facilitate a more competitive, consumer-oriented economy in China, while firms and investors in the United States and Europe will enjoy new means of diversifying their portfolio investments, as will China's savers, the report found.
The report, entitled "Renminbi Ascending: How China's Currency Impacts Global Markets, Foreign Policy and Transatlantic Financial Regulation", was developed by Atlantic Council's C. Boyden Gray Fellow on Global Finance and Growth, Chris Brummer, and sponsored jointly by the City of London Corporation, Standard Chartered and Thomson Reuters.
"Renminbi internationalisation is an unprecedented financial event that is irrevocably changing the global market, and presenting an enormous opportunity for both Chinese and the world's business to trade and invest," said Mark Boleat, Policy Chairman at the City of London Corporation. - China Daily
The Yuan, or RMB has been pegged to the dollar since 1994, and that relationship has been used to turn the tables on global import/export ratios, especially after the U.S. signed NAFTA that same year. And while both countries have an extraordinarily high level of debt in their banking system and economies, the biggest difference currently is that much of America's debt resides outside the U.S., and in the hands of foreigners while China's debt is entirely internal, and is much easier to dissolve if necessary should a liquidity or inflationary crisis one day emerge.
The rise of the Yuan is already taking place, with currency swap lines having been created in over 23 major economies, and a bond market having been established in the City of London. And with the opening of the AIIB earlier this year, the probability of China taking over many of the West's former financial platforms makes bringing in the Yuan as a joint reserve currency more beneficial sooner rather than later.
As the IMF currently works with China to include the Yuan in the basket of currencies that support the SDR, and with over 12% of global trade already being done using the RMB, the emergence of the Yuan as a de facto global reserve is right now taking place. And the reality of accepting the Yuan officially as such would be better for the rest of the world, otherwise the alternative will be the clash of two competitive reserve currencies fighting it out for global supremacy, which will benefit no one when one of the two eventually falls.
