IMF to study RMB's international use for next SDR basket review

Discussion in 'China' started by amoy, Mar 25, 2015.

  1. amoy

    amoy Senior Member Senior Member

    Joined:
    Jan 17, 2010
    Messages:
    5,519
    Likes Received:
    1,544
    IMF says to study RMB's international use for next SDR basket review later this year


    [​IMG]
    Renminbi enters Americas' tradings system as payment currency this week via Canada
     
  2.  
  3. amoy

    amoy Senior Member Senior Member

    Joined:
    Jan 17, 2010
    Messages:
    5,519
    Likes Received:
    1,544
    Britain supports eventual RMB inclusion in IMF's SDR basket
    Gold and RMB to join SDR?

    Future of the SDR
    [​IMG]
     
  4. ezsasa

    ezsasa Senior Member Senior Member

    Joined:
    Jul 12, 2014
    Messages:
    3,512
    Likes Received:
    3,044
    Location:
    Hyderabad, Andhra Pradesh, India
  5. Rowdy

    Rowdy Co ja kurwa czytam! Senior Member

    Joined:
    Sep 6, 2014
    Messages:
    3,256
    Likes Received:
    2,959
    Location:
    Milky Bar
    China has won!! Once SDR inclusion it is game over and victory to china!
     
  6. amoy

    amoy Senior Member Senior Member

    Joined:
    Jan 17, 2010
    Messages:
    5,519
    Likes Received:
    1,544
    Probably u're not aware >>>
    China pushes to top as world's largest gold miners
     
  7. ezsasa

    ezsasa Senior Member Senior Member

    Joined:
    Jul 12, 2014
    Messages:
    3,512
    Likes Received:
    3,044
    Location:
    Hyderabad, Andhra Pradesh, India
  8. amoy

    amoy Senior Member Senior Member

    Joined:
    Jan 17, 2010
    Messages:
    5,519
    Likes Received:
    1,544
    Let China Join the Global Monetary Elite


    Despite the shock some may feel, the unexpectedly high weighting of the RMB is no reason to either oppose or put off a decision. Tokyo and London may have their feelings hurt, but the U.S. dollar and euro will still be dominant under any scenario.

    To be sure, there is no guarantee China will take the necessary and, in some cases, difficult steps to make the RMB “freely usable” between now and when the IMF votes on SDR inclusion. China hasloosened domestic deposit interest rates; started to regularly provide currency holdings information to the IMF; expanded access to its stock, bond, and futures markets; modestly reduced barriers to Chinese households to transfer RMB in and out of China; and, as we saw last week, unpegged the RMB from the U.S. dollar, which should result in the unification of the RMB exchange rate in and outside of China and facilitate hedging against the RMB’s value by international investors. While on the right path, China’s capital account still needs to be liberalized further in order for the RMB to be widely and easily exchanged globally, something China’s leadership recognizes.

    Then again, we should not exaggerate what is needed to make the currency “freely usable.” Some suggest that admitting China into the SDR before it fully opens its capital account would mean watering down international standards simply to accommodate a rising China. But the IMF admitted the Japanese yen into the SDR basket in 1980, 12 years before Japan fully opened its capital account. The IMF guidelines and history show that “freely usable” is an ambiguous standard — the very trend toward greater openness of the capital account is itself important. On this score, the signs are pointing in the right direction for the RMB.

    If China does what is needed to join the SDR basket, other countries should cheer. When the IMF Executive Board gets together in November, China will need 70 percent of the IMF’s vote, and the United States’ 17 percent voting share is not enough to block the change by itself. The United States would have to persuade several allies to join it, which could result in a showdown that would dwarf the ill-fated tussleover the China-led Asian Infrastructure Investment Bank in early 2015. There, the United States claimed that the AIIB fight was about China going outside existing international institutions to set up a new club that ran by its own rules. In the case of the SDR basket, China is trying to become a more central player in the heart of the existing international system, and it’s willing to pay a high price to do so. That is behavior that the United States should reinforce, not oppose.

    If the United States were to oppose the RMB’s entry in the face of broad support, that would validate the charge that the United States is not worried about norms and standards, but simply about protecting its dominance in the face of rising power. The United States might win the short-term battle, but it would unintentionally encourage China to build an off-ramp from the global community and set up its own alternative institutions. All the SDR in the IMF isn’t worth protecting if it results in fragmentation of the global system.

    [​IMG]
    https://foreignpolicy.com/2015/09/28/china-india-trade-modi-obama/



    ~~Still waters run deep. ~~from my MiPad using tapatalk
     
  9. Compersion

    Compersion Senior Member Senior Member

    Joined:
    May 6, 2013
    Messages:
    1,848
    Likes Received:
    454
    Location:
    India
    Would love to have a study on how bad data from PRC is timed well to holidays and stock exchange closure and even military parades.

    Kicking the can down the roads ? Passing the buck to get other to take the lead down ?

    Earlier PRC shares supposed to join msci index but did not ... Smart Business leaders in hong Kong giving quotes of being exiled ... And reminding people of cultural revolution and bad times before.
     
  10. amoy

    amoy Senior Member Senior Member

    Joined:
    Jan 17, 2010
    Messages:
    5,519
    Likes Received:
    1,544
    China Completes SWIFT Alternative (CIPS)

    Needless to say, China will be delighted to have its own unified payment system, one that will further internationalize the Renminbi which at least check had become one of the top five payment currencies in November 2014, overtaking both the Canadian and the Australian dollar based on SWIFT data.

    Until now, cross-border yuan clearing has to be done either through one of the offshore yuan clearing banks in the likes of Hong Kong, Singapore and London, or else with the help of a correspondent bank in mainland China.


    It will also make it far more difficult for the NSA to track payments to and from the mainland when such compromised intermediaries as SWIFT are used.

    This is how the Mercator Institute for China Studies previewed this major development:



    [​IMG]

    Finally, as it becomes easier to transact in non-USD terms, it will merely accelerate the adoption of the Chinese Yuan as the primary currency of global trade, or what little is left of it, as opposed to the currency of financial engineering.


    The final observation to make here is that if indeed it was the Obama administration's brilliant ploy to kick out Russia - and by geopolitical affiliation, China - out of a monetary transaction mechanism that is controlled and supervised by the US and force the two biggest challengers to US global dominance into their own (or joint) payment system, then well, congratulations: it succeeded.
     
  11. amoy

    amoy Senior Member Senior Member

    Joined:
    Jan 17, 2010
    Messages:
    5,519
    Likes Received:
    1,544
    Is This How China's Currency Will Make Its Mark on the World Stage?
    London will become the first overseas market for renminbi-denominated Chinese sovereign debt.


    The news that China would issue sovereign debt in London isn’t surprising. Reports late in September noted that the People’s Bank of China (PBOC) was set to begin issuing short-term renminbi-dominated debt in London. “I have strongly supported China’s efforts to increase the international use of the renminbi,” Osborne noted then, at the conclusion of the U.K.-China Economic and Financial Dialogue in Beijing.

    The strategic logic of the deal makes sense given the current bilateral climate between David Cameron’s Tory government and China’s leadership. Britain has made no secret of its desire to attract Chinese investment. The current government in the U.K. has gone as far as to defy the warnings of the United States in approaching China, as encapsulated in the row that ensued after the U.K. signed up to China’s new Asian Infrastructure Investment Bank (AIIB) as a founding member despite U.S. protests about the bank’s questionable environmental and governance standards.

    For China, this deal will mark a major milestone in the renminbi’s arrival as a major currency on the world stage. This will be the first time that renminbi-denominated Chinese sovereign debt will be available outside of Chinese borders, opening up an international renminbi debt market. Osborne, more so than any other Western treasury chief, has made a point of emphasizing his bullishness about the Chinese economy, despite this summer’s equity market tremors. “Britain and China — we will stick together,” he declared triumphantly in Beijing less than a month after China’s so-called “Black Monday.”

    The development could help the incorporation of the renminbi into the International Monetary Fund’s Special Drawing Rights currency basket. The SDF basket currently includes the euro, the Japanese yen, the pound sterling, and the U.S. dollar. In August 2015, the IMF declared that it would delay its decision on the renminbi’s eligibility for SDR inclusion pending a determination of just how freely usable the currency is.

    The renminbi is currently a managed float currency and controlled closely by the PBOC. Amid equity market volatility, the PBOC has repeatedly adjusted the value of the currency, initially pitching it as a “one-off depreciation.” Opening up an international market for renminbi-denominated sovereign debt could help balance worries that the renminbi is still too vulnerable to calculated political influence.

    http://thediplomat.com/2015/10/is-this-how-chinas-currency-will-make-its-mark-on-the-world-stage/


    ~~Still waters run deep. ~~from my MiPad using tapatalk
     
  12. amoy

    amoy Senior Member Senior Member

    Joined:
    Jan 17, 2010
    Messages:
    5,519
    Likes Received:
    1,544
    International Monetary Fund approves reserve currency status for China's yuan

    The inclusion of the yuan in the Special Drawing Rights basket - alongside the US dollar, euro, yen and British pound - could put it under pressure to weaken

    UPDATED : Tuesday, 01 December, 2015, 10:43am

    [​IMG]
    A bank clerk counts Chinese currency notes. Photo: AP

    The International Monetary Fund has approved the inclusion of the yuan among its Special Drawing Rights currencies at a board meeting in Washington, a move analysts say will put the currency under pressure to weaken.

    The yuan, also known as the renminbi, will join the US dollar, euro, Japanese yen and British pound in the basket of currencies the IMF uses as an international reserve asset.

    The IMF said on Monday that the yuan “met all existing criteria” to be included as one of the currencies used for the global organisation’s SDR, which is used as the standard for dealing with its 188 member governments.

    READ MORE: Six key things to know about the vote on China’s yuan joining the IMF basket of currencies
    The Chinese currency will have a weight of 10.92 percent in the basket. It is lower than the dollar's 41.73 percent and 30.93 percent for the euro but above the Japanese yen's 8.33 percent and British pound's 8.09 percent. The addition will take effect on October 1, 2016.
    [​IMG]
    Currently the weights of the dollar, euro, pound and yen are 41.9 percent, 37.4 percent, 11.3 percent and 9.4 percent respectively.

    The move is seen as recognition of China's financial and economic progress after years of reform, though the authorities may take time to deliberate on how to further improve.

    "SDR inclusion will be a recognition of how far China has come," said Jonathan Fenby, China managing director at research firm Trusted Sources. "But it remains a question whether China will continue to open up the capital account."

    READ MORE: The rise of the renminbi: How adding China's yuan to IMF's SDR basket will spur the currency towards further reform
    As its economy slowed, China would be reluctant to bring down capital flow barriers when "households are moving money out", said Fenby, a former editor of the South China Morning Post.

    China has been making more changes to its financial system this year - it lifted controls on deposit and lending rates, opened up the interbank bond market to foreign central banks, tweaked the yuan exchange rate formation mechanism to give market forces greater play, and increased its frequency of releasing some of the country's financial data.

    All these were done despite its weakening economy and rising financial risks with a clear target of getting the IMF to recognise the yuan as a stable currency.

    While joining the SDR would boost foreign holdings of the yuan in the long run, the currency is now under pressure to weaken from a stronger US dollar and gloomy growth prospects.

    The central bank also may not be able to intervene as easily in the foreign exchange market in future.

    Banks such as Standard Chartered and Bank of America Merrill Lynch expect the yuan to weaken between 2 to 9 per cent next year. Researcher Zhang Ming, with the Chinese Academy of Social Sciences, said the yuan was overvalued and set to weaken. But he predicted "no big yuan fall immediately after the SDR inclusion".

    China Merchants Bank analyst Liu Dongliang said the IMF decision would have "no direct relation" to the yuan's value. The currency's global profile would be decided by whether it was easy and cheap to use in payments, he said. "It means China has to open up domestic financial markets and accept international rules."

    China would do so cautiously, Zhang said. "China has already [done so much] to get the SDR deal done. It would be unwise to open up while the risks are high."
     
  13. Compersion

    Compersion Senior Member Senior Member

    Joined:
    May 6, 2013
    Messages:
    1,848
    Likes Received:
    454
    Location:
    India
    Good stuff also it looks good for PRC.

    But why I reading it is "symbolic" only.

    Like when did Japan have joined the imf sdr and when was their financial crisis crash ... Wish to read more and learn more ...
     
  14. amoy

    amoy Senior Member Senior Member

    Joined:
    Jan 17, 2010
    Messages:
    5,519
    Likes Received:
    1,544
    video S. Korea to issue Yuan-denominated FX bonds in China
    http://english.cntv.cn/2015/11/30/VIDE1448872202818288.shtml

    South Korea will issue Yuan-denominated foreign exchange stabilization bonds in China by the year end, according to Yonhap News Agency. The estimated amount would be about 600 billion Won, or 517 million US dollars. Analysts say the move would help local firms do business in China, as they could get the currency directly without going through third-parties.

    ~Tapa talks: Orange is the new black.~
     
  15. amoy

    amoy Senior Member Senior Member

    Joined:
    Jan 17, 2010
    Messages:
    5,519
    Likes Received:
    1,544
    China's yuan officially joins the SDR

    WASHINGTON, Oct. 5 (Xinhua) -- The historic inclusion of China's Renminbi into the Special Drawing Right (SDR) basket of the International Monetary Fund (IMF) has deeper significance for China and the global economy, said Zhang Tao, deputy managing director of the IMF, on Wednesday.

    "The inclusion of the Renminbi thus recognizes a significant increase in the internationalization of the Chinese renminbi (RMB) in recent years, underpinned by policy reforms to achieve China's transition to an increasingly open and market-based economy," said Zhang Tao at a forum held by the Peterson Institute for International Economics and China Finance 40 Forum in Washington.

    Last November, the IMF decided to include the RMB in the SDR basket as a fifth currency, effective Oct. 1, 2016. It's the first time for the IMF to include a currency from emerging market economy in its SDR basket.

    It means that IMF members can use the RMB in the IMF-related transactions. "In essence, the renminbi becomes integral to a future crisis response," said Zhang.

    According to Zhang, the inclusion of RMB in the SDR basket will make the currency more attractive as an international currency, contributing to greater risk diversification.

    It will also strongly support China's continued efforts to reform its monetary, foreign exchange, and financial systems, and help facilitate its increased integration in the global financial community, said Zhang.
     

Share This Page