China’s Entrance Into SDR Basket Shifts Global Finance

Remember the renminbi billboard sighting in China back in March of 2015? Well, it has officially landed.

On Monday, October 3rd, 2016, a turning point for America begins: The beginning of the end for the global U.S. Dollar hegemony.

 

China’s yuan, or Renminbi (RMB), will officially join the International Monetary Fund (IMF)’s Special Drawing Rights (SDR) basket on Saturday, which indicates a step up in the international status of the currency.

  • The inclusion is first and foremost recognition of the substantial reform efforts conducted by Chinese monetary authorities.
  • “The RMB is already, for a number of years, very much an international currency.
  • China has also taken additional measures to allow the inclusion of RMBinto the SDR,” said Jurgen Conrad, head of the Economics Unit at the Asian Development Bank in China.
  • Alfred Schipke, the chief China representative of the IMF, thinks that the move’s significance isn’t limited only to the country.
  • “[I think] the RMB joining the SDR will indeed be a milestone for China, but also for the international financial system. It, in effect, recognizes the progress that has been made on the reform side in China over the past couple of years,” said Schipke. Continue reading

Opinion: Why China probably has a lot more gold than it admits

China has lifted a veil over its gold holdings and confirmed its interest in providing more up-to-date reserves data by announcing a near 60% jump in its official bullion assets since 2009.

The declaration on Friday, in a Chinese language announcement on the People’s Bank of China (PBoC) website, appears a judicious attempt to show more statistical transparency as China modernizes its international currency arrangements. Continue reading

US unable to stop AIIB’s goal of breaking monopoly

Over 40 countries applied to become founding members of the China-backed Asian Infrastructure Investment Bank (AIIB) before the March 31 deadline, doubling the size of the bank from Beijing’s initial conception.

The applications showed that the planned bank, which has been seen as posing a challenge to the Asian Development Bank (ADB) and a possible threat to the International Monetary Fund and the World Bank, is supported by both developed and emerging economies. Continue reading

Developing World: Euro Loses Attraction as Reserve Currency

Countries in the developing world are drastically reducing their euro holdings as economic instability in Europe leads them elsewhere to stock their currency reserves. Euro holdings are at their lowest level in a decade, according to the International Monetary Fund.

That is the message to be gleaned from the latest installment of the regular International Monetary Fund report on currency reserves held by countries around the world. According to the report, developing economies shed some $45 billion worth of euros in 2012 and have sold close to $90 billion worth of euros since the second quarter of 2011. Continue reading