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China to allow all trades to settle in yuan, encourages use as reserve currency

 
Anonymous Coward
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03/02/2011 06:44 PM
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China to allow all trades to settle in yuan, encourages use as reserve currency
China aims to allow all exporters and importers to settle cross-border trades in the yuan by 2011, according to the Chinese central bank, reported Reuters.

bsflag

Moreover, China will “respond to overseas demand for the yuan to be used as a reserve currency” and allow the yuan to flow back into China more easily.

This is all part of China’s plan for the internationalization of its currency, which may, in the decades to come, threaten the global ‘market share’ of other currencies like the US dollar.

Previously, China also announced that bilateral trades with Russia and Malaysia will begin to be conducted with the yuan and the ruble and ringgit, respectively.

Other moves on the part of China to internationalize its currency include allowing foreign companies to issue yuan-denominated bonds and relaxing rules for foreign financial institutions to access the yuan.

Aside from the efforts of the Chinese government, fundamentals also point to the increasing international popularity of the Chinese currency.

China is already the leading trade partner with Australia and Japan. It’s also the leading or a large trade partner with many of its smaller neighbors. The purpose of having foreign currencies is to conduct foreign trade and investment, so the yuan is expected to become a more attractive currency for China’s trade partners, especially as the government continues to relax restrictions.

Currently, the yuan is not that popular globally; the US dollar is the leading international currency, followed by the euro, pound sterling, and the yen. However, for the fundamental reasons described above, the yuan is expected to make a dent in the ‘market shares’ of these currencies in the coming years.

What’s the advantage having an international currency?

For one, it makes it easier to become an international financial hub, which brings a whole host of advantages to a country. Two, it gives the country and its companies easy access to international capital.

[link to hken.ibtimes.com]
Anonymous Coward
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03/02/2011 07:49 PM
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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
5a5abumpbumphidingbanana2
Anonymous Coward
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Germany
03/02/2011 07:52 PM
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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
China aims to allow all exporters and importers to settle cross-border trades in the yuan by 2011, according to the Chinese central bank, reported Reuters.

bsflag

Moreover, China will “respond to overseas demand for the yuan to be used as a reserve currency” and allow the yuan to flow back into China more easily.

This is all part of China’s plan for the internationalization of its currency, which may, in the decades to come, threaten the global ‘market share’ of other currencies like the US dollar.

Previously, China also announced that bilateral trades with Russia and Malaysia will begin to be conducted with the yuan and the ruble and ringgit, respectively.

Other moves on the part of China to internationalize its currency include allowing foreign companies to issue yuan-denominated bonds and relaxing rules for foreign financial institutions to access the yuan.

Aside from the efforts of the Chinese government, fundamentals also point to the increasing international popularity of the Chinese currency.

China is already the leading trade partner with Australia and Japan. It’s also the leading or a large trade partner with many of its smaller neighbors. The purpose of having foreign currencies is to conduct foreign trade and investment, so the yuan is expected to become a more attractive currency for China’s trade partners, especially as the government continues to relax restrictions.

Currently, the yuan is not that popular globally; the US dollar is the leading international currency, followed by the euro, pound sterling, and the yen. However, for the fundamental reasons described above, the yuan is expected to make a dent in the ‘market shares’ of these currencies in the coming years.

What’s the advantage having an international currency?

For one, it makes it easier to become an international financial hub, which brings a whole host of advantages to a country. Two, it gives the country and its companies easy access to international capital.

[link to hken.ibtimes.com]
 Quoting: Anonymous Coward 1282638


Also reported by major German news magazin "Spiegel".

The next step in the Dollars march from the worlds major reserve currency to toilet paper,
Anonymous Coward
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03/02/2011 07:53 PM
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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
Sounds like they want to de-peg from the dollar. Where will Ben get to hide his hyperinflation now? First India, now China.

hmm
Anonymous Coward
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03/02/2011 07:54 PM
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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
[link to www.spiegel.de]
Stu

User ID: 1134640
United States
03/02/2011 09:15 PM

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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
pretty big news



capital will flow into China and dollars become shit exploding the national debt



the roles will be reversed with the cost of everything going up while the yuan buys more
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Anonymous Coward
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03/02/2011 09:36 PM
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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
pretty big news



capital will flow into China and dollars become shit exploding the national debt



the roles will be reversed with the cost of everything going up while the yuan buys more
 Quoting: Stu




Unless . . . . =) . . . there are no Chinese.
Anonymous Coward
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03/02/2011 09:37 PM
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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
How soon will this impact the dollar? I mean I will still be able to get my dollar value menu at Mcdonals right?
 Quoting: Anonymous Coward 1132105


If you don't mind getting a single french fry in that "value" meal.
Anonymous Coward
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03/02/2011 09:39 PM
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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
Think of it this way, if China depegs from the dollar then other countries will follow suit. Dollars will no longer be used in international trade settlements. That means no demand for dollars overseas, that means all those tens of trillions of dollars (FRNs) will come back to America. That means hyperinflation without printing another single dollar.
Anonymous Coward
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03/02/2011 09:39 PM
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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
How soon will this impact the dollar? I mean I will still be able to get my dollar value menu at Mcdonals right?
 Quoting: Anonymous Coward 1132105


If you don't mind getting a single french fry in that "value" meal.
 Quoting: Anonymous Coward 961432


How long till this impacts us?
Anonymous Coward
User ID: 1282708
Greece
03/02/2011 09:49 PM
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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
pretty big news



capital will flow into China and dollars become shit exploding the national debt



the roles will be reversed with the cost of everything going up while the yuan buys more
 Quoting: Stu


After this happens, can we repay our debt to you guys and your IMF with peanuts?
Comedian

User ID: 1271642
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03/02/2011 09:56 PM
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Re: China to allow all trades to settle in yuan, encourages use as reserve currency
File under "Well duh"
Don't run. You'll just die tired.


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