Yuan to Be the World’s 5th Reserve Currency?

aso118

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Quote from: gkv9 on April 07, 2015, 10:22:56 PM

Quote from: tokeweed on March 30, 2015, 08:48:12 AM

Quote from: biggerbig on March 30, 2015, 08:45:34 AM

Chinese are pushing to make yuan reserve currency so I wouldn't be surprised to see this happening in the next 10-15 years. Yes there is a lot of controversy around Yuan but Chinese economy is growing every year in a vast way

And also keep in mind China holds billions worth of US treasury bonds and notes. And soon... bitcoin.

They already have most Bitcoins at their hands I guess...
I have seen an article somewhere, don't remember, but according to its stats, China holds more than 40% of total BTC in circulation, is it actually true???

When people say China holds billions worth of US treasury bonds, they are talking about the Chinese government. Chinese people might hold bitcoins, but I don't think the government holds any significant sum.

gkv9

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Quote from: tokeweed on March 30, 2015, 08:48:12 AM

Quote from: biggerbig on March 30, 2015, 08:45:34 AM

Chinese are pushing to make yuan reserve currency so I wouldn't be surprised to see this happening in the next 10-15 years. Yes there is a lot of controversy around Yuan but Chinese economy is growing every year in a vast way

And also keep in mind China holds billions worth of US treasury bonds and notes. And soon... bitcoin.

They already have most Bitcoins at their hands I guess...
I have seen an article somewhere, don't remember, but according to its stats, China holds more than 40% of total BTC in circulation, is it actually true???

aso118

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http://www.reuters.com/article/2015/04/07/us-china-imf-sdr-idUSKBN0MY24220150407

A Chinese win at IMF no one-way bet for yuan

(Reuters) - Later this year the IMF might include the Chinese yuan in its official basket of reserve currencies, a political and economic triumph for Beijing in the teeth of U.S. opposition, but slowing growth in China is likely to limit the impact of the victory.

mrhelpful

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Sounds about right.

Its 10x bigger then USA alone, which means more people, more people, more spending, more use of that dollar / yuan.

So yeah, also they have more millionaires there then u.s due to the population difference.

Grand_Voyageur

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Quote from: ?? on ??

There is not one mention of China’s official request to have the RMB added to the SDR composition on ZeroHedge, and other large alternative sources. Very strange indeed, considering the gravity of that request.

I think it has more to do with IMF rules as well as with major central banks holding CNY after the many currency swap deal they did in the last years:

European Central Bank and the People’s Bank of China: http://www.ft.com/intl/cms/s/0/236651ca-3185-11e3-817c-00144feab7de.html

Bank of England and the People's Bank of China: http://www.bbc.com/news/business-23020718

Currency swap deal list here: http://en.wikipedia.org/wiki/Internationalization_of_the_renminbi#List_of_RMB_Bilateral_Swap_Agreements

Zorrocoin

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Quote from: countryfree on March 30, 2015, 05:36:36 AM

The question is more political than economical. Many countries don't want China to be more powerful than it already is.

I agree with you that its political but I see it from another aspect. I think trust is a big issue for yuan. Capital control by the government is an annoying thing for capital holders. You can not know what will happen to yuan due to the goverments reactions.

Lets look at bitcoin, we can see how Chinese government look at the issue. They just try to ban it since there is no control over it.

Q7

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I still think it needs to sort out some issues internally. Fundamentally, yes, you are right, yuan is strong but to become the world's reserve currency, there still needs to be some demand for it to facilitate international transactions. Don't forget in order to purchase crude oil, it's automatically that you will need dollar for the purchases. Other issues like transparency, politically issues arising from within the government, imbalances lead by rapid economic growth and don't forget yuan is essentially still considered to be grossly undervalued.

bisom

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Quote from: OrientA on March 28, 2015, 11:07:59 AM

China does nothave the military power to make Yuan reserve currency

Maybe military power is an effect to make any currency as a reserve but I don't think so. Government transparency is the highest factor to be used as a reserve.

Chinese government has an high control on the flow of capital. If they ease restirictions over the capital maybe yuan is used as a reserve currency.

OrientA

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Quote from: Robert Paulson on April 06, 2015, 01:56:59 PM

once the mountains of USD debt starts being defaulted on and the hyperinflation kicks in due to the drop in USD demand without those debts the world will completely change within a year.

Dollar debt will not default if US keeps on printing money. Hyper inflation will be a reality.

Robert Paulson

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once the mountains of USD debt starts being defaulted on and the hyperinflation kicks in due to the drop in USD demand without those debts the world will completely change within a year.

AtheistAKASaneBrain

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Vast sums worldwide are still held as dollar denominated assets that can't easily be moved to other currencies crypto or not without creating massive disruption. We will get there but it will take time.

umairsaleem

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You're talking about a currency that used in a country that take up one fifth of the earth population, besides this country is grow extremely fast, this is normal, don't make become a 'China threat'. Cheesy

Robert Paulson

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it will happen eventually, once the Chinese start selling to their domestic market instead of loaning money to America just so it could use it to buy stuff from them.

that will be the end game of the USA, with a constant current account deficit of 440 billion$ every year the USA along with its military is completely dependent on China to continue throwing good money after bad.
http://www.tradingeconomics.com/united-states/current-account

that's what you get for abandoning free market capitalism and replacing it with a highly regulated paper money driven central bank controlled "market".

aso118

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Quote from: kelsey on April 05, 2015, 08:38:07 AM

Quote from: countryfree on March 30, 2015, 05:36:36 AM

The question is more political than economical. Many countries don't want China to be more powerful than it already is.

by many countries you mean United States.

China's neighbours too. China has border disputes with most of its neighbours and is perceived as a kind of bully in the region.

kelsey

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Quote from: countryfree on March 30, 2015, 05:36:36 AM

The question is more political than economical. Many countries don't want China to be more powerful than it already is.

by many countries you mean United States.

waterpile

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Quote from: Coinshot on March 28, 2015, 03:56:41 PM

Quote from: Slark on March 28, 2015, 08:59:39 AM

It is true that Chinese economy is already number 1 in the world, but this is not enough for Yuan to be seen as top world currency. How can everyone can trust in yuan when even chinese government are not taking this matter seriously, and they could have change regulations long time ago to make you an even stronger as reserve currency but instead they prefered dollars.

They are stuck. They have to prop up the dollar as it is the very basis of their export driven economy and otherwise all their reserves would become useless. So they are forced to buy even more dollars and in effect are paying for USA's lifestyle.

Its a cycle and I dont see it beng broken, and due to this USD will be better than CNY as a reserve currency.

Here it says that its part of their Economic strategy to be competitive

-China makes sure its currency, the yuan, is always lower than the U.S. dollar. Why? Part of its economic strategy is to keep its export prices competitive.

http://useconomy.about.com/od/worldeconomy/p/What-Is-the-US-Debt-to-China.htm

innocent93

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I think there is big resistance against my country in the west. That is not to insult but I think there is fear because of how everyone in China seems to think the same. This is dangerous because of how focused we can be.

tokeweed

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Quote from: biggerbig on March 30, 2015, 08:45:34 AM

Chinese are pushing to make yuan reserve currency so I wouldn't be surprised to see this happening in the next 10-15 years. Yes there is a lot of controversy around Yuan but Chinese economy is growing every year in a vast way

And also keep in mind China holds billions worth of US treasury bonds and notes. And soon... bitcoin.

biggerbig

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Chinese are pushing to make yuan reserve currency so I wouldn't be surprised to see this happening in the next 10-15 years. Yes there is a lot of controversy around Yuan but Chinese economy is growing every year in a vast way

tokeweed

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Quote from: countryfree on March 30, 2015, 05:36:36 AM

The question is more political than economical. Many countries don't want China to be more powerful than it already is.

Ooooh but they will.

countryfree

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The question is more political than economical. Many countries don't want China to be more powerful than it already is.

biggerbig

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Quote from: ?? on ??

Of course I have stuff from Japan at home, I also have a lot from Malaysia Taiwan and of course China. I'm not saying that Japan is insignificant, but if their currency can be treated as world reserve why not yuan?

It's about how strong the economy of certain country is, its about how stable the economy is, and of course its about how significant the economy is (The economy of Japan is the third largest in the world by nominal GDP).

As for yuan, as long as the Chinese government maintains capital controls on the conversion of its currency it cannot be used as a reserve currency
http://en.wikipedia.org/wiki/Reserve_currency#Chinese_yuan

biggerbig

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Quote from: ?? on ??

Sure, it could be treated as such. If such small and IMO insignificant currency as yen can be one, why not yuan?
Let me remind you that it is used by 10 times more people than yen.

yen insignificant? I don't know where You live but I'm certain that You have something from Japanese manufacturer in Your house. TV, phone, car maybe, Japanese companies are known world wide.

From Wikipedia:
"The economy of Japan is the third largest in the world by nominal GDP, the fourth largest by purchasing power parity and is the world's second largest developed economy. According to the International Monetary Fund, the country's per capita GDP (PPP) was at $36,899 or the 22nd highest in 2013"

Yen insignificant? Yeah right...

Bitcoiner7788

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I think that if China is going to put yuan as a reserve currency, then why we do not propose BTC as a reserve currency? (just kidding)

BTW if many years later bitcoin is a reserve currency then everyone can laugh at this

pitham1

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Quote from: Meuh6879 on March 28, 2015, 05:47:35 PM

Yuan is a damn more good currency than the USD ...
and ... China don't make war, it's astonishing.

China is perceived to be a bully in its neighborhood.
It has border disputes with all its neighbors, not to mention its position on Taiwan.
But the more fundamental problem is with Yuan's convertibility.

Meuh6879

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Yuan is a damn more good currency than the USD ...
and ... China don't make war, it's astonishing.

galbros

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The Yuan is still not freely convertible yet, so I don't think so.

I disagree about military power and it certainly has the economic power but it is not willing to give up the control necessary (yet) to have their currency become a reserve currency.

Coinshot

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Quote from: Slark on March 28, 2015, 08:59:39 AM

It is true that Chinese economy is already number 1 in the world, but this is not enough for Yuan to be seen as top world currency. How can everyone can trust in yuan when even chinese government are not taking this matter seriously, and they could have change regulations long time ago to make you an even stronger as reserve currency but instead they prefered dollars.

They are stuck. They have to prop up the dollar as it is the very basis of their export driven economy and otherwise all their reserves would become useless. So they are forced to buy even more dollars and in effect are paying for USA's lifestyle.

Its a cycle and I dont see it beng broken, and due to this USD will be better than CNY as a reserve currency.

tabnloz

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Quote from: pitham1 on March 27, 2015, 11:30:20 PM

Another trigger for the USD's decline.

http://www.marketwatch.com/story/chinas-yuan-may-join-elite-money-club-this-year-2015-03-25

China’s yuan may join elite money club this year

In what would be a huge milestone in China’s emergence as a major world financial power, the International Monetary Fund looks likely to adopt the country’s currency into the basket that makes up its global forex benchmark.

Or so say strategists at Bank of America Merrill Lynch, writing in a note Wednesday that they believe the IMF will vote this October to include the yuan as one of the units that make up the Fund’s “Special Drawing Rights” (SDR), a sort of meta-currency used in IMF transactions.

This might not seem like a big deal, but Merrill Lynch assures that it is. By joining the elite club — there are only four currencies in the basket right now: the U.S. dollar, the euro, the British pound and the Japanese yen — it would “legitimize its use as a reserve currency,” possibly reducing China’s cost of foreign borrowing and offering an “extra degree of freedom in financing future current-account deficits,” the strategists said.

That's certainly one school of thought. I think you'll see the Yuan included with a larger weighting (in the basket) given to gold. SDR's will be the 'new' reserve-reserve anyway.

Bytty

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Competition for reserve currencies is growing, hope we see bitcoin there some day.

aso118

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Quote from: countryfree on March 28, 2015, 07:47:52 AM

There are still very few people outside China having yuans in their wallet. I don't see this changing before years.

As long as central banks hold CNY as a reserve currency, it will be good enough.
This move might cause a change.

OrientA

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China does nothave the military power to make Yuan reserve currency

Slark

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It is true that Chinese economy is already number 1 in the world, but this is not enough for Yuan to be seen as top world currency. How can everyone can trust in yuan when even chinese government are not taking this matter seriously, and they could have change regulations long time ago to make you an even stronger as reserve currency but instead they prefered dollars.

dzambodzetem

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Quote from: countryfree on March 28, 2015, 07:47:52 AM

There are still very few people outside China having yuans in their wallet. I don't see this changing before years.

To be reserve currency Yuan doesn't need to be in peoples wallets. Reserve currency is about governments keeping significant quantities of currency as part of their foreign exchange reserves.
From Wikipedia:
"People who live in a country that issues a reserve currency can purchase imports and borrow across borders more cheaply than people in other nations because they don't need to exchange their currency to do so."

But there is a question of Chinese government maintains capital controls on the conversion of its currency
Wikipedia source:
http://en.wikipedia.org/wiki/Reserve_currency#Chinese_yuan

countryfree

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There are still very few people outside China having yuans in their wallet. I don't see this changing before years.

pitham1

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Another trigger for the USD's decline.

http://www.marketwatch.com/story/chinas-yuan-may-join-elite-money-club-this-year-2015-03-25

China’s yuan may join elite money club this year

In what would be a huge milestone in China’s emergence as a major world financial power, the International Monetary Fund looks likely to adopt the country’s currency into the basket that makes up its global forex benchmark.

Or so say strategists at Bank of America Merrill Lynch, writing in a note Wednesday that they believe the IMF will vote this October to include the yuan as one of the units that make up the Fund’s “Special Drawing Rights” (SDR), a sort of meta-currency used in IMF transactions.

This might not seem like a big deal, but Merrill Lynch assures that it is. By joining the elite club — there are only four currencies in the basket right now: the U.S. dollar, the euro, the British pound and the Japanese yen — it would “legitimize its use as a reserve currency,” possibly reducing China’s cost of foreign borrowing and offering an “extra degree of freedom in financing future current-account deficits,” the strategists said.

Topic: Yuan to Be the World’s 5th Reserve Currency? (Read 2356 times)