IMF's denial of China into SDR will lead to Yuan ending dollar domination sooner

[LeveragedBuyout]

@Technogaianist

This is why I try not to post on PDF anymore, but since you are one of the quality members, I will respond. It's Fisking time.

Let me state a few points.

1. Since the last financial crisis the US has been printing dollars by the trillion (quantitative easing). Each new dollar printed devalues the dollar in your hand. No country in its right mind wants to hold on to it. This fact alone will bring an end to its role as the world reserve currency.

Wrong.

2. Many countries are coming to bilateral agreements using each others currency, an effective vote of no-confidence in the dollar.

Wrong. I will borrow @qwerrty 's graphic from earlier:

Look at how much the USD has increased its volume share vs the CNY.

3. Almost all countries are buying gold; China,Russia,Germany etc. This can only be as a preparation for the end of the dollar, as Gold will maintain its value unlike currencies, which are essentially paper.

Wrong.

4. The shift in support by the US from the Saudis to Iran has apparently infuriated the Saudis. Together with the lack of value of the dollar this will begin the end of the 'petrodollar'. If the oil producers want payment in anything other than the dollar, the downward pressure on the dollar will be intolerable.

Wrong (see point #1). Oil exporters will continue to demand the dollar because the dollar is the best store of value (vs. the rapidly depreciating emerging markets currencies and the basket-case Euro).

5.The only reserve currency of the world is the dollar. At present no other currency can replace it on its own.

Wr--err, right. What was your point, again?

One has to be absolutely blind not to see that the day of the dollar is over. All that is absent is its public burial.

In light of points 1-4 and your admission in point 5... wrong.

What will happen after is something else.

Brilliant. What comes after today is tomorrow, and what comes after this year is next year.

@Technogaianist

If you were asking about the thread topic and not that particularly cretinous post about the end of the USD, then I would simply ask why China wanted admission to the SDR if exclusion from the SDR strengthens China. The USD will eventually fall as the reserve currency, but today is not that day, and China's CNY as it is now will not be the one to topple the USD.

 

[Keel]

Let me state a few points.

1. Since the last financial crisis the US has been printing dollars by the trillion (quantitative easing). Each new dollar printed devalues the dollar in your hand. No country in its right mind wants to hold on to it. This fact alone will bring an end to its role as the world reserve currency.

2. Many countries are coming to bilateral agreements using each others currency, an effective vote of no-confidence in the dollar.

3. Almost all countries are buying gold; China,Russia,Germany etc. This can only be as a preparation for the end of the dollar, as Gold will maintain its value unlike currencies, which are essentially paper.

4. The shift in support by the US from the Saudis to Iran has apparently infuriated the Saudis. Together with the lack of value of the dollar this will begin the end of the 'petrodollar'. If the oil producers want payment in anything other than the dollar, the downward pressure on the dollar will be intolerable.

5.The only reserve currency of the world is the dollar. At present no other currency can replace it on its own.

One has to be absolutely blind not to see that the day of the dollar is over. All that is absent is its public burial.

What will happen after is something else.

What the americans have been doing in printing money is Fiat Money

There is one nasty quality also done best by the United Sanctions of America - the ability to create problems in a country that it dislikes. This has made the uSa a safe heaven for the troubled people to park their surplus money whether they be in bonds, hard currency, real estates or in stock market. So the immense demand in FDI also help strengthen the position of the dollar in a big way

The "Occupy Central" movement is a case in point which occurred not too long ago

HK is one of the key financial centers of the world, a free. open and stable economy but its sovereigny belongs to China. uSa wants to dampen HK's financial position which has been going very well with phenonmenal IPOs and market capitalisation throughout the recent years. it also wants to create a government which only answers calls from uSa in the name of "democracy" against China's amidst the global waves of "colour revolutions" during that time.

The 'movement' failed by itself credit to the patience and administration skills of the Central and HK goverments and the "silent majority" who hated the movement. But the danger of upheavals are still there when the "democratic" kingpins are lying low now until the time is ripe for them for another massive bite-back

http://www.economist.com/blogs/freeexchange/2015/08/yuan-and-sdr

Two criteria determine whether a currency can be part of the SDR. Its issuing country must be a major exporter, and the currency must be freely usable. No one disputes that China meets the first criterion. Over the past five years, its exports averaged 11% of the global total. That places it behind the European Union and America but well ahead of Japan and Britain (the euro, dollar, yen and pound are the four currencies that currently make up the SDR).

The second criterion is the tricky one. If freely usable is understood as fully convertible, the yuan would not make the grade. China places caps on how much cash its residents can take out of the country; forces international companies to do extensive paperwork before bringing large sums in; and limits foreigners to strict quotas for investing in its capital markets.

But, as the IMF explains in its paper, freely usable means something else. It refers to whether a currency is widely used in international transactions and whether it is widely traded in global markets. Full convertibility would help a currency meet these standards but is not a prerequisite. In theory judging this ought to be clear-cut. Across a range of indicators considered by the IMF, the yuan seems to sit just outside the SDR club. In 2014 it ranked 7th among currencies in countries’ official reserve assets. It was the 8th-most used for both international debt securities and cross-border payments. As for trading, it ranked 11thin global currency spot markets.


Read more at http://www.economist.com/blogs/freeexchange/2015/08/yuan-and-sdr#RTGfPGQ6J6zbc6PA.99

Good article but somehow falls short of comprehensiveness
Apart from full convertibilty of the Yuan, I think IMF also asks for a free floating interest rate ( correct me if I am wrong on this) which is crazy and not to mention the uSa has the veto power to deny Yuan into the basket of currencies in SDR

 

[j20blackdragon]

The boost in the value of the USD over the past year or so has everything to do with the collapse of the Euro. It's a flight to safety reaction.

jamal18 isn't wrong about the quantitative easing.

Also the Renminbi has been the #2 trade finance currency since 2013.

 

[Raphael]

Trump: Yuan devaluation will be ‘devastating’ to US competitiveness | Asia Times

Trump: Yuan devaluation will be ‘devastating’ to US competitiveness

-----------------------------------

Trump can cry all he wants, but now that there is no longer the SDR carrot dangling in front of us, there are no rules or inhibitions. We can devalue the RMB, dump treasury bonds, etc, with absolute impunity.

 

[mike2000 is back]

@Technogaianist

This is why I try not to post on PDF anymore, but since you are one of the quality members, I will respond. It's Fisking time.



Wrong.

Wrong. I will borrow @qwerrty 's graphic from earlier:

Look at how much the USD has increased its volume share vs the CNY.




Wrong.

Wrong (see point #1). Oil exporters will continue to demand the dollar because the dollar is the best store of value (vs. the rapidly depreciating emerging markets currencies and the basket-case Euro).



Wr--err, right. What was your point, again?



In light of points 1-4 and your admission in point 5... wrong.



Brilliant. What comes after today is tomorrow, and what comes after this year is next year.

@Technogaianist

If you were asking about the thread topic and not that particularly cretinous post about the end of the USD, then I would simply ask why China wanted admission to the SDR if exclusion from the SDR strengthens China. The USD will eventually fall as the reserve currency, but today is not that day, and China's CNY as it is now will not be the one to topple the USD.

Always loved/valued all your posts. Very useful information indeed and put them in a well defined/adequate template.

Too bad we dont see much of you these days. but i understand you. PDF is getting crazier by the day.

 

[vtnsx]

Always loved/valued all your posts. Very useful information indeed and put them in a well defined/adequate template.

Too bad we dont see much of you these days. but i understand you. PDF is getting crazier by the day.

As I know, Pakistan and China has a relationship. Someone should create another forum that isn't biased on opinions due to diplomatic relationship but it should be based on statistics and data from reliable sources. A forum with low restriction on comments like the one on Youtube.

 

[xunzi]

As the biggest trading country in the world, our potential to increase yuan influence is limitless. We are 5th right now.. only 0.04% less than Japan at the 4th spot. We only start to create exchange hub recently, so within 5-10 years, yuan will be top 3 at least.

 

[rcrmj]

As I know, Pakistan and China has a relationship. Someone should create another forum that isn't biased on opinions due to diplomatic relationship but it should be based on statistics and data from reliable sources. A forum with low restriction on comments like the one on Youtube.

these two rules you, your TTP, Bphone and glorious vietcong out in no time``

 

[vtnsx]

As the biggest trading country in the world, our potential to increase yuan influence is limitless. We are 5th right now.. only 0.04% less than Japan at the 4th spot. We only start to create exchange hub recently, so within 5-10 years, yuan will be top 3 at least.

So many people hate China. Why the hell would they want to support you? you are a fool. No one likes you, how can they want to support you? Such stupid talk. No foundation. LOL!

these two rules you, your TTP, Bphone and glorious vietcong out in no time``

lol, you're laughing at a technology that Hauwei is dreaming to become. You don't even know what you're laughing at, really. I'm actually embarrassed for you. lol!

by the way, it's TPP not TTP. You can't even get it right. So clumsy. How can you convince me to believe in your nonsense with that clumsiness of yours?

 

[Keel]

what the comparison of these 2 charts has actually shown that the gaining % of USD is pretty much at the expense of Euro,

RMB is gaining % which has elevated its postion from 7th to 5th as a result of our growth in international trade albeit not as big as USD which as I partially pointed out in my comment above due to the politically reasons and the other due to petro-dollar and high-tech US exports such as weapons

RMB is advancing not retreating in global impacts.
One currency or two are missing from the chart which may or may not be a surprise. Do you know what they are?

 

[xunzi]

So many people hate China. Why the hell would they want to support you? you are a fool. No one likes you, how can they want to support you? Such stupid talk. No foundation. LOL!

Because we are the bomb. LOL

 

[vtnsx]

Because we are the bomb. LOL

LOL!

 

[jhungary]

The yuan is still a long way from qualifying for SDR status. It has nothing to do with the 'evil' west/U.S not wanting China to join like some chinese members here think.

I dont know if chinese members here know that to qualify for the basket, currencies must be widely used to make payments in global transactions, and also widely traded in major exchange markets. So in this regard, the share a currency makes up of official reserves, international banking liabilities and global debt securities, as well as the volume of use in foreign-exchange markets are all major factors the IMF considers before granting a currency basket status.

Im sure @Shotgunner51 ,@LeveragedBuyout will agree with me that China doesnt yet meet all the crutiria as of now. Since as of the latest figures, the yuan ranked just seventh among currencies as a share of official reserves, behind the four SDR members as well as even the Australian and Canadian dollars. The IMF itself said the yuan constituted just a tiny 1.1 percent of official reserves, compared with 63.7 percent for the U.S. dollar and over 23% for the euro, and for our pound 4%(i.e almost 4 times china's value, despite the fact that we have a smaller economy/trade). Plus, the yuan also ranks outside the top five in terms of debt securities and currency trading. etc etc

So, as far as China's capital account market is still closed and its currency not freely convertible, then forget about it being included. The dollar, euro, pound, and yen are all fully convertible and their capital account markets are all open, so any country who wants to join this elite club will have to meet this criteria, there will be no favors im afraid. So china shouldnt take it personal IMO.


Ahahahah......you people and the Bphone. Leave the high tech Bphobe alone.

You missed one point, and that point is rather important.

To be a basket currency, the currency itself have to be able to freely trade without any restriction, and there could not be any financial control on the currency itself. Financial Transparency is one major point being within the basket

It does not matter how many partner are there or how many people use it to trade internationally, if the government can interdict a currency, that is not free-tradable. And hence, it will not be able to be on the basket until the government of China have a non-interference policy to its currency, which honestly something they just did by devaluing RMB by 2%...

 

[TaiShang]

Trump: Yuan devaluation will be ‘devastating’ to US competitiveness | Asia Times

Trump: Yuan devaluation will be ‘devastating’ to US competitiveness

-----------------------------------

Trump can cry all he wants, but now that there is no longer the SDR carrot dangling in front of us, there are no rules or inhibitions. We can devalue the RMB, dump treasury bonds, etc, with absolute impunity.

I am happy the IMF evaluation ended the way it ended. Now it is all out currency wars. Korea has been complaining about JPY's deep devaluation. They will join the fray, if they haven't already done so.

 

[Hypersonicmissiles]

The final frontier for China is reducing the market share of the dollar.

China has already removed the US from the largest trading nation, largest manufacturer, largest auto market, largest energy consumer, largest e-commerce market, many others.

The doubters said China will never be able to beat the US in these areas, but China did beat them.

China must start to use the Renminbi for most of its trade and allow access to the domestic bond market. Dollar's main power is its use in global trade which leads to its use in financing and investment. All the trade surpluses result in central banks accumulating dollars (as trade is done in dollars) which goes as part of reserves.