Military Review

Yuan wants to cart

Why is China year after year trying to get the status of a key currency for the yuan? The most obvious answer is that the inclusion of the yuan in the basket of special drawing rights will confirm at the international level the commitment of the PRC leadership to the ideas of forming a market economy. In addition, Beijing hopes to bring its currency to the level of the dollar and the euro: according to SWIFT estimates, the yuan has already become the fourth in the list of monetary units widely used in international settlements.

On the topic of the yuan argued in Bloomberg Business Andrew Mayeda

The author recalls that representatives of the International Monetary Fund (IMF) made it clear to China that in the near future, the yuan could join the basket of reserve currencies, known as Special Drawing Rights (SDR). This information came to Bloomberg directly from Chinese officials.

Offering to understand the question of why the yuan "fall" in the SDR basket, the analyst recalls history create special drawing rights.

The IMF created the SDR in 1969 year to increase global liquidity. These “rights” are not technically a currency, but they give IMF member countries that have SDRs the right to receive any currency from the basket (currently it is dollar, euro, yen and pound sterling).

The question of including the yuan in the basket is of “decisive importance” for the PRC, since the SDR can then be converted into Chinese currency “on demand”.

In a speech delivered in 2009, Zhou Xiaochuan, Governor of the People’s Bank of China, said that the global financial crisis highlighted the risks of a global monetary system that relies on national key currencies. Without uttering the name of the yuan, Comrade Zhou said that the SDR should assume the role of “super-sovereign reserve currency”, and the basket should be expanded, and all major economies should be included in it.

Over the years, Chinese officials have begun to speak out more openly, said Andrew Mayeda.

After a recent meeting with President Barack Obama at the White House, President Xi Jinping thanked Washington for supporting the idea of ​​including the yuan in the SDR basket. The approval of the IMF would allow reformers in the Chinese government to declare that China’s economy is heading towards the market.

Analysts believe that the IMF will approve the inclusion of the yuan in the basket of special drawing rights. After all, the global use of the yuan has increased: this currency was the fourth among those most frequently used in global payments (in August 2015, the share of the yuan was 2,79%; according to SWIFT, the yuan managed to outrun the yen).

Defining the “free use” of a particular currency, the IMF operates with several indicators that are guidelines for inclusion in the SDR basket.

The staff of the IMF indicated earlier that the yuan is still inferior to its global competitors in a number of indicators: the share of use in official reserves, debt obligations and currency exchange transactions. Nevertheless, experts say, 24 executive directors of the fund will make a final decision based on their own judgments. Many large countries, including the US, Germany and the UK, are already saying that they are ready to support the inclusion of the yuan in the basket, if only the Chinese currency meets the criteria of the IMF.

Supporting the yuan can strengthen the relationship between China and the UK. The latter seeks to transform London into the main center of calculations in renminbi.

The inclusion of the yuan in the SDR basket can also help the IMF increase its credibility with the Chinese. China and other emerging markets were supposed to get increased representation in the fund (the corresponding reforms were already mentioned in the 2010 year, when their plan was agreed), but the US Congress did not ratify the transformation.

What can happen to RMB assets in the long run?

At least 1 trillion dollars of world currency reserves “migrate” to Chinese assets if the yuan becomes part of the IMF basket, experts at Standard Chartered Plc and AXA Investment Managers say.

The volume of placement by foreign companies of securities denominated in Chinese yuan and known as panda bonds may exceed $ 50 billion over the next five years (World Bank forecast).

Thus, let us add, turning the yuan into a part of the SDR basket would be a truly strategic step towards the global expansion of China. Economic expansion would be complemented by financial strategy.

The other day, the promotion of the yuan to the SDR basket was confirmed by Reuters.

The International Monetary Fund is ready to include the yuan in the basket of reserve currencies, reports from Washington TASS with reference to Reuters.

The report of the IMF experts, containing recommendations for the board of directors of the organization, "provides a positive opinion on the inclusion of the yuan in the basket."

“On the technical side, everything is going according to plan, there are also no obvious political obstacles,” writes TASS. “The expert opinion cited in the report tends to include the renminbi (the official name of the yuan) in the basket, but the decision remains with the board of directors.”

There is, however, one obstacle. American

TASS notes that the United States, which has a blocking vote in the IMF, is skeptical about the yuan initiative.

In addition, even if the report is supported in November by the board of directors, the yuan will go to the basket only in October 2016 of the year, since the organization has already extended (in August) the current basket for nine months: from December 31 to 2015 of September to September 30 of 2016.

Observed and commented on Oleg Chuvakin
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  1. Same lech
    Same lech 10 November 2015 06: 13
    IMF staff indicated earlier that the yuan is still inferior to its global competitors in a number of indicators: the share of use in official reserves, debt obligations and foreign exchange transactions.

    This is how to understand .... that the printing press is under repair?
    The United States printed its green papers in such volumes that they could not be covered by any gold reserves ... and look anyway quoted on the currency market ... that’s what the skillful work of the scammers from the financial sharks of the USA does.
    1. VseDoFeNi
      VseDoFeNi 10 November 2015 06: 16
      Quote: The same LYOKHA
      The United States printed its green papers in such volumes that they could not be covered by any gold reserves.

      They are in the bubbles of the CDS system and other virtualka.
      1. oldseaman1957
        oldseaman1957 10 November 2015 08: 06
        Quote: VseDoFeNi
        They are in the bubbles of the CDS system and other virtualka.
        - When you have all the levers of pressure in your hands, and you can change the rules of the game along the way, you can keep all the "bubbles and other virtualka" as long as you like. Here for the collapse of the "partners" you need something else. Clever, but at the same time furious for them.
        1. VseDoFeNi
          VseDoFeNi 10 November 2015 08: 16
          Quote: oldseaman1957
          you can hold as long as you like.

          This is an illusion. wink
          Quickly, you forgot how blundered in 2007. smile

          So, for a general development look.

  2. VseDoFeNi
    VseDoFeNi 10 November 2015 06: 15
    I wonder what China, whose industry is built by the West and is aimed at Western consumption, will do, on falling global demand and the lack of resources to translate into domestic demand?

    Exports fell in October by 3,6% versus 3,7% in September, which turned out to be worse than analysts had predicted to drop by 3,2%.

    In general, China's foreign trade in October fell by 9% - a drop recorded for the eighth consecutive month.
  3. 205577
    205577 10 November 2015 06: 28
    In my opinion, one of the important factors holding China back is the huge debt of the Americans. At the same time, the option of non-payment of US debts has already been run-in in full. The United States is currently a boorish hoax who has lured money from the whole World, and now absolutely does not want to give it back. Moreover, the United States itself, by constantly promoting inflation, which is a completely artificial process, actually devalues ​​its debts to the World.
    In this situation, the only thing that can force the boor to return the money (and preferably with penalties and interest) is the intervention of bailiffs and riot police, so that they stupidly knock on snot, "drop" their muzzle on the floor and take the money from their pockets. But since the role of bailiffs and riot police in the modern world went to the same boor, there are no effective ways to return the money he borrowed.
    True, the boor has not just friends, but singers, whom he simply "milks" a little less than the others (although maybe more, as you see it), but also allows them to use a little borrowed funds for their own purposes.
    And now China, apparently realizing that according to its own rules, it will not be able to return the money, decided to join the gang, so to speak, become a "friend" of the boor in the hope that the boor will allow him a little more than the others and even share something.
    In my opinion, it is futile. The whole experience of mankind shows that the leader of the gang voluntarily will NEVER give up and share nothing.
    China follows our path through which it is flawed, when it tries to play according to other people's rules and written for the benefit of others; we also entered the WTO about the same (oh, how liberalism was crucified as we need it - it means everything is complete.
    China is a very strong power, of course, they will know better what to do next, but it will soon come to them that it will be easier and cheaper to bring down the world economy once, lowering the dollar to a minus and at the same time parting with the hope of repaying the debt than being a constantly milking cow for the USA .
    The owner can even sincerely love his cow, but he will never make him equal to himself.
    1. Monster_Fat
      Monster_Fat 10 November 2015 07: 43
      Wrong. The USA is just an ordinary "usurer" and that's it. The Anglo-Saxons, together with the Jews, created a "world" usurious "economy and parasitize at the top of it. Everything is very simple - the entire world economy is recalculated in dollars, that is, any exchange of currencies takes place by direct or indirect comparison with the dollar. Emitting dollars by pouring them into the world economy , The United States emits its power over the world, because being the owner of this currency, it can always "press any bank to the nail" in any country in which at least one dollar is located or has passed. in order to get the coveted dollar, countries need to spend more and more of their resources and depreciate their currencies.This is clearly seen in the exchange rate of gold, which is getting cheaper and is at a low price in relation to the dollar, the rate.As for the yuan and the ruble, I can say that the so-called "direct" exchange rate of these currencies is actually a fiction, since the exchange rate is calculated anyway through the intermediate exchange rate of the dollar to these currencies am.
      1. VseDoFeNi
        VseDoFeNi 10 November 2015 08: 11
        Quote: Monster_Fat
        The dollar is not really getting cheaper, it's getting more expensive

        As you look at US shares, you immediately understand that the dollar is getting more expensive! laughing
        And gold is just an attempt to delay its end.
        In general, how much the rope does not curl, but the end will be. wink
      2. Karlovar
        Karlovar 10 November 2015 14: 34
        A model of the economy based on loan interest is not viable ... There comes a time when all the money through the loan interest falls into the hands of a moneylender (who does not produce any useful goods), but nothing remains in the hands of the producer, trader, plowman, shoemaker, consumer .. .This is an imbalance, fraught with explosion, revolution, chaos, or a change of model ... By the way, this moment has already arrived ... By the way, even the illiterate Temuchin gave money and commodity loans from his treasury to Armenian merchants without interest! He understood that if over time all of the money came to him and his heirs (through a loan interest), then the merchants and people would be penniless, trade and production would be bent and the empire would not last long ...
        1. Mikhail m
          Mikhail m 10 November 2015 20: 45
          What is happening now in our economy. Banks are bursting with money, production and the population are bent without them, regularly paying excessive loans. Something in this process needs to be corrected, only there is no one who can do this something.
          1. VseDoFeNi
            VseDoFeNi 11 November 2015 08: 28
            Quote: Mikhail M
            What is happening now in our economy.

            Not only in ours, but in the world as a whole.

            Quote: Mikhail M
            production and the population is bent without them, regularly paying excessive loans.

            Do not talk nonsense. (with)
            “Today, under Putin, people in Russia live as RICH as they never lived in the foreseeable past. Vivid evidence of this is the courtyards of Russian cities, clogged with cars, many of which were bought with overpayment on credit. This indicates that people have money to overpay and the lack of intelligence, so as not to overpay.
            And I will repeat it as long as there are those who do not understand this. ”© VseDoFeNi

            Quote: Mikhail M
            Something in this process needs to be corrected, only there is no one who can do this something.

            Our task is to nationalize the banking system, starting with the Central Bank, subsoil and other natural resources, strategic industries, including energy and transport. Return the state’s monopoly on foreign trade, prohibit the free movement of capital across the border. Return the state monopoly on the production and trade of alcohol and tobacco with a gradual reduction in their turnover to zero.

            And while you lament and wait for this someone instead of your participation in the processes, nothing will change.
    2. Gani
      Gani 10 November 2015 11: 55
      but soon it will come to them that it will be easier and cheaper to bring down the world economy once having reduced the dollar to a minus and at the same time part with the hope of repaying the debt than being a constantly milking cow for the USA.
      - a radical proposal,
      those. you suggest that China now, when their GDP and living standards and the well-being of the Chinese are still growing (and still at a frantic pace), take and break this system, within which this growth is taking place, to unleash a "thermonuclear" financial war with the states ( so that the "cow" would take the "owner" on the horns), and not far from it to the real one. Do you think they are the Chinese leadership of psychos, kamikaze? cut off the branch on which you sit? For what? what would "boor" punish?
      Even if China succeeds in "winning" without being hit with a military baton, what's next? Well, the states are no longer the world hegemon in the form in which they are now, and what will happen to China, do you have an answer?
      1. Down House
        Down House 10 November 2015 12: 41
        Quote: Gani
        and what will happen to China, do you have an answer?

        China will have to start working to saturate primarily its own, and not the American, market.
        But this market is so huge that immediately it is technically unrealistic.
        But when the demand for Chinese goods is already developed in China, and its currency becomes "world" - then the United States will have a very bad time.
      2. Karlovar
        Karlovar 10 November 2015 14: 40
        You set off! In addition, Chinese foreign exchange reserves = Chinese external debt (to Western banks) ... When the United States devalues ​​China's foreign exchange reserves through inflation, they automatically devalue China's foreign debt! China will not lose anything. Such is the Chinese insurance ....
      3. 205577
        205577 11 November 2015 07: 16
        You can laugh, but it seems to me that China may simply NOT want to continue to be a cow. This is a moral component.
        And China has justified the practical component for a long time.
        China collapsing the US financial system through undeniable costs, for its part, will solve the global number of problems the source of which for China is the United States.
        The financial system is actually the only vital tool (instrument) that the United States uses the whole world, all the advantages of the United States are based on the robbery of others at the expense of this system. By destroying it, you will destroy not only the United States, you will destroy the entire world system of government, which means that you can create a new one for yourself. No sacrifice, but it is possible.
    3. Down House
      Down House 10 November 2015 12: 45
      Quote: 205577
      The United States is currently a boorish hoax who has lured money from the whole World, and now absolutely does not want to give it back

      What do you mean do not want? Initially, no one asks for these debts.
      These are "virtual" debts of the entire world system of "interest rate" economy, and the US is far from the worst indicator in this regard, the same Germany and Great Britain have debts in relation to GDP 2-3 times more than the US.
      But for some reason no one screams that Germany will fall apart tomorrow!
  4. Tektor
    Tektor 10 November 2015 12: 18
    China wants to share the fate of bankrupt? ... I had a better opinion of their intellectual abilities.
    The binding of a currency to a physical asset during a period of economic instability is much more profitable than the status of a reserve currency, i.e. dollar proxy due to the exorbitance of the debts accumulated there, which will inevitably be dragged to the bottom and the Chinese economy. For us it is a danger, because because of the collapse, the Chinese can climb to us. Do we need it? This is a category of state security, and here it is better to overtake.
  5. yuriy55
    yuriy55 10 November 2015 16: 41
    I get the impression that the dollar fooling will continue until some boy shouts: "The king is naked !!!" That is, some country with a strong economy or a group of countries will abandon it. He will prefer other forms of payments, he will simply offer to return, for example, to gold ... You can't just pump air into your gold and foreign exchange reserves. You can be branded as wise and without acting like everyone else, you do not feel like a foolish simpleton ... what

    Most likely, if, of course, the yuan gets the status of a reserve currency, China will not collect debt obligations of Washington. And, in fact, it is not recommended to delay the end for a long time, you can simply stay without anything ... laughing