Comments on: China “serious about the plan to internationalise” Yuan http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html Finance, Economics and Markets Fri, 10 Feb 2012 00:37:00 +0000 hourly 1 By: Polorise http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-57020 Polorise Mon, 07 Sep 2009 14:16:00 +0000 http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-57020 Edward, would you be intrested in contributing to our site on Emerging / Developing Markets ? www.mystockvoice.com similar to other syndication platforms, we provide pic, bio & links to original articles. Best regards Pavel Edward,

would you be intrested in contributing to our site on Emerging / Developing Markets ?

http://www.mystockvoice.com

similar to other syndication platforms, we provide pic, bio & links to original articles.

Best regards

Pavel

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56978 Edward Harrison Tue, 01 Sep 2009 23:55:00 +0000 http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56978 Bilateral trade agreements probably come first as this will get the renminbi in widespread use. Simultaneously comes a wider trading-band followed by a managed float. Eventually, the Chinese will freely float and allow convertibility. How long this takes is anyone's guess. Five years, ten? It is certainly a long way off. Bilateral trade agreements probably come first as this will get the renminbi in widespread use. Simultaneously comes a wider trading-band followed by a managed float. Eventually, the Chinese will freely float and allow convertibility.

How long this takes is anyone’s guess. Five years, ten? It is certainly a long way off.

]]> By: Kinukawa http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56977 Kinukawa Tue, 01 Sep 2009 23:29:00 +0000 http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56977 Thank you for having picked up this topic on your blog. When do you think China would implement internetionalization of renminbi? I am afraid that I do not remember but it should be around the same time when Shanghai is expected to be an international financial center, which is 2020. For that purpose China should make it possible that non-resident of China could freely transfer renminbi funds from his or her own account with domestic bank to other accounts and that renminbi could be traded in the offshore interebank foreign exchange market. As an interim measure, currency basket composed of currencies in the region could be possible as suggested and proposed by some researchers. For renminbi to be a component of the basket, it needs to be more internationalized than it is now. Thank you for having picked up this topic on your blog.

When do you think China would implement internetionalization of renminbi? I am afraid that I do not remember but it should be around the same time when Shanghai is expected to be an international financial center, which is 2020.

For that purpose China should make it possible that non-resident of China could freely transfer renminbi funds from his or her own account with domestic bank to other accounts and that renminbi could be traded in the offshore interebank foreign exchange market.

As an interim measure, currency basket composed of currencies in the region could be possible as suggested and proposed by some researchers. For renminbi to be a component of the basket, it needs to be more internationalized than it is now.

]]> By: Anonymous http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56968 Anonymous Tue, 01 Sep 2009 12:36:00 +0000 http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56968 Thanks, I truly pray your right! Take care Thanks, I truly pray your right! Take care

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56967 Edward Harrison Tue, 01 Sep 2009 12:16:00 +0000 http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56967 It is simply not politically realistic to think so. All of these things take time to plan and implement. Right now, there are discussions here and there about reserve currencies, but it has yet to become an issue taken up by the G-7. Without any meaningful policy discussion, the issue is not even in what would be considered the planning stages. As an example, after Bretton Woods collapsed, it took five years before all currencies became freely floating. Moreover, no currency now used is adequate to replace the dollar - not the Euro (too new), not the Yuan (not used internationally, not fully exchangeable, not free-floating), and none of the others because they are too small. More likely, if a change occurs, it will be from the dollar to a basket of currencies/commodities. When this could happen is pure speculation. It is simply not politically realistic to think so. All of these things take time to plan and implement. Right now, there are discussions here and there about reserve currencies, but it has yet to become an issue taken up by the G-7. Without any meaningful policy discussion, the issue is not even in what would be considered the planning stages. As an example, after Bretton Woods collapsed, it took five years before all currencies became freely floating.

Moreover, no currency now used is adequate to replace the dollar – not the Euro (too new), not the Yuan (not used internationally, not fully exchangeable, not free-floating), and none of the others because they are too small. More likely, if a change occurs, it will be from the dollar to a basket of currencies/commodities.

When this could happen is pure speculation.

]]> By: Anonymous http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56966 Anonymous Tue, 01 Sep 2009 12:02:00 +0000 http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56966 "I still believe there is no currency that can replace the dollar as the world’s reserve currency in the next few years. " Why? “I still believe there is no currency that can replace the dollar as the world’s reserve currency in the next few years. ”

Why?

]]> By: Edward Harrison http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56965 Edward Harrison Tue, 01 Sep 2009 12:01:00 +0000 http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56965 The Chinese may get a larger basket of currencies and commodities to replace the dollar as the reserve currencies. However, this is some while off. I do not mean to say here that the Chinese are seeking to make the Yuan a reserve currency. I do think that, like the Japanese, who were not well-regarded by many Asians after the War, the Chinese can, in time, start doing bilateral trade in their currency. Economic concerns will trump political ones eventually. As for the connection to the dollar, here's what I wrote on the article's page at Seeking Alpha: The Chinese are doing long-term planning and nothing more in my view. The world they see eventually would be one in which the Yuan is fully exchangeable, free-floating, and often used in bilateral trade as the U.S. Dollar, Euro, Pound, or Swiss Franc are. At present, none of these is true. The question is: how quickly can they get there and what does this mean about the U.S. dollar's status? I take an agnostic view on this question because the Chinese are more concerned with the benefits of having an internationally-accepted currency without the negatives (wild valuation swings, capital flight, etc) Americans tend to view this as a threat to the U.S. dollar, and it is to the degree it is precipitated by a growing distaste for dollar assets. But, that does not mean that the Chinese will get their international currency any time soon. Right now, they are laying the groundwork, much as the EU did for the formation of the Euro. The Chinese may get a larger basket of currencies and commodities to replace the dollar as the reserve currencies. However, this is some while off. I do not mean to say here that the Chinese are seeking to make the Yuan a reserve currency.

I do think that, like the Japanese, who were not well-regarded by many Asians after the War, the Chinese can, in time, start doing bilateral trade in their currency. Economic concerns will trump political ones eventually.

As for the connection to the dollar, here’s what I wrote on the article’s page at Seeking Alpha:

The Chinese are doing long-term planning and nothing more in my view. The world they see eventually would be one in which the Yuan is fully exchangeable, free-floating, and often used in bilateral trade as the U.S. Dollar, Euro, Pound, or Swiss Franc are.

At present, none of these is true. The question is: how quickly can they get there and what does this mean about the U.S. dollar’s status? I take an agnostic view on this question because the Chinese are more concerned with the benefits of having an internationally-accepted currency without the negatives (wild valuation swings, capital flight, etc)

Americans tend to view this as a threat to the U.S. dollar, and it is to the degree it is precipitated by a growing distaste for dollar assets. But, that does not mean that the Chinese will get their international currency any time soon. Right now, they are laying the groundwork, much as the EU did for the formation of the Euro.

]]> By: aitrader http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56959 aitrader Tue, 01 Sep 2009 06:02:00 +0000 http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-56959 "Eventually, these efforts will bear fruit." Hmmm, not sure if I can agree. Japan will resist any attempt by China to control the region. I doubt Taiwan will ever accept the Yuan as a reserve currency. Many smaller Asian countries regard China with suspicion after their annexation of Tibet and Mongolia and their stance on Taiwan. The "greater China" policy where the Chinese annex areas that were formerly vassal states when China was an empire makes many Asian countries very uneasy regarding their giant neighbor to the North. I think the Chinese will try to push the Yuan, by hook or by crook, as a regional trading currency but ultimately will push many Asian countries into an anti-China trading alliance that will do more harm than good for the Chinese in the long run. ------------------------------------ Addendum: Some decidedly un-green weeds re:China, "Beijing's derivative default stance rattles banks" http://www.reuters.com/article/wtUSInvestingNews/idUSSP47327420090831 “Eventually, these efforts will bear fruit.”

Hmmm, not sure if I can agree. Japan will resist any attempt by China to control the region. I doubt Taiwan will ever accept the Yuan as a reserve currency. Many smaller Asian countries regard China with suspicion after their annexation of Tibet and Mongolia and their stance on Taiwan. The “greater China” policy where the Chinese annex areas that were formerly vassal states when China was an empire makes many Asian countries very uneasy regarding their giant neighbor to the North.

I think the Chinese will try to push the Yuan, by hook or by crook, as a regional trading currency but ultimately will push many Asian countries into an anti-China trading alliance that will do more harm than good for the Chinese in the long run.

————————————

Addendum:

Some decidedly un-green weeds re:China,

“Beijing’s derivative default stance rattles banks”

http://www.reuters.com/article/wtUSInvestingNews/idUSSP47327420090831

]]> By: aitrader http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-6187 aitrader Tue, 01 Sep 2009 06:01:39 +0000 http://www.creditwritedowns.com/2009/08/china-serious-about-the-plan-to-internationalise-yuan.html#comment-6187 "Eventually, these efforts will bear fruit." Hmmm, not sure if I can agree. Japan will resist any attempt by China to control the region. I doubt Taiwan will ever accept the Yuan as a reserve currency. Many smaller Asian countries regard China with suspicion after their annexation of Tibet and Mongolia and their stance on Taiwan. The "greater China" policy where the Chinese annex areas that were formerly vassal states when China was an empire makes many Asian countries very uneasy regarding their giant neighbor to the North. I think the Chinese will try to push the Yuan, by hook or by crook, as a regional trading currency but ultimately will push many Asian countries into an anti-China trading alliance that will do more harm than good for the Chinese in the long run. “Eventually, these efforts will bear fruit.”

Hmmm, not sure if I can agree. Japan will resist any attempt by China to control the region. I doubt Taiwan will ever accept the Yuan as a reserve currency. Many smaller Asian countries regard China with suspicion after their annexation of Tibet and Mongolia and their stance on Taiwan. The “greater China” policy where the Chinese annex areas that were formerly vassal states when China was an empire makes many Asian countries very uneasy regarding their giant neighbor to the North.

I think the Chinese will try to push the Yuan, by hook or by crook, as a regional trading currency but ultimately will push many Asian countries into an anti-China trading alliance that will do more harm than good for the Chinese in the long run.

]]>