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You think they mailed in a postcard from some magazine? Get serious. China is yet quite a long way from being the sort of mature, established international player that the SDR market basket economies are. There are just four currencies currently involved afte all: yen, pounds, euros, and dollars. Maybe one day, yuan will be an equivalent to those, but that day is yet a long way off.
I have zero doubts it will eventually happen and open huge doors to new investment opportunities. But no sooner than starting in Sept. of 2016, as stated in the link.
It's no surprise, the UK has been a major player in currency trading and anything financial for quite some time. It will also be a while before anyone treats the Yuan as a reserve currency. In fact Xi has stated that he doesn't want that to happen soon. They would have to stop their government currency manipulation, which would not be good for the Chinese economy. Once China has an economy that's not so influenced by exporting and trade, it may start to change how it works it's currency, until then only morons would use the Yuan as a currency reserve. The point of a reserve currency is stability and the Yuan is not stable. China may be the largest economy in the world, but it isn't stable. No country with year to year growth changing 5%+/- is not stable. The Yuan simply isn't a good currency to use as a reserve, now investing in the Yuan is a different story, and could be debated if it's good or not.
China has proposed in the past a new global currency to use as a reserve currency. That wouldnt be good for the USD, Pound, CAD, or Euro, but it's not really a bad idea once the global economy is considered.
Yes, a long way. The yuan is not at the moment remotely comparable to the yen, pound, euro, or dollar. In its best light, it is an emerging regional currency that remains without demand and unavailable in significant parts of the global economy. Then there are those pesky tampering and transparency issues.
Quote:
Originally Posted by J.Thomas
It will happen so fast your head will spin.
Right. And you have such a good track record on these sorts of things. Go back to zerohedge.
China has proposed in the past a new global currency to use as a reserve currency. That wouldnt be good for the USD, Pound, CAD, or Euro, but it's not really a bad idea once the global economy is considered.
You would think that the GBP, AUD, CAD, NZD would move to one currency.
As you know Iceland's banks all crashed in 2008. The value of the ISK dropped about 50% compared to the Euro. They considered unilaterally adopting someone else's currency. The Euro, the Danish crown, the Canadian dollar were all considered.
Icelanders did not use much cash, but predictably when the banks crashed, many people wanted to withdraw money and keep it in cash. The ISK current exchange rate is 10,000 kr.=CAD$106. The biggest banknote they printed in Iceland was the 5,000 kr. The government resisted a larger denomination until 24 Oct 2013 when they launched a new 10,000 kr. banknote. They printed 4 million of the new notes to add to the 7.1 million 5,000 kr. notes in circulation.
If one of these societies ever succeeds in going cashless, they could adopt any currency they want by just changing the conversion.
You would think that the GBP, AUD, CAD, NZD would move to one currency.
As you know Iceland's banks all crashed in 2008. The value of the ISK dropped about 50% compared to the Euro. They considered unilaterally adopting someone else's currency. The Euro, the Danish crown, the Canadian dollar were all considered.
Icelanders did not use much cash, but predictably when the banks crashed, many people wanted to withdraw money and keep it in cash. The ISK current exchange rate is 10,000 kr.=CAD$106. The biggest banknote they printed in Iceland was the 5,000 kr. The government resisted a larger denomination until 24 Oct 2013 when they launched a new 10,000 kr. banknote. They printed 4 million of the new notes to add to the 7.1 million 5,000 kr. notes in circulation.
If one of these societies ever succeeds in going cashless, they could adopt any currency they want by just changing the conversion.
I agree somewhat, those countries would likely be better of with a common currency, but I'm guessing national pride will hinder that...
That's an interesting point about cashless societies, I do favor going cashless at some point.
The Yuan is now accepted as legal tender in Zimbabwe along with the USD, ZAR, Euro, GBP, and the Botswana Puna. It's a small step, and it will be interested to see where it goes. China doesn't (according to Ji Xinpeng), and shouldn't want their currency value to increase, if it became a global currency similar to the USD, Euro, or GBP the currency would likely increase in value. Not really good for a country whose economy is heavily based on exporting. Countries whose economies have high quality goods, strong service, banking, financial sectors don't want a weak currency.
My guess this is more of an experiment to see how the world would react to a more global Yuan. In the long run I would guess the BRICS will bring out a new global reserve currency.
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