The hottest real enemy of China finally appeared,

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China's real enemy has finally emerged. The United States is afraid of three points. Since the financial crisis, the "dominance of the dollar" has given birth to "my dollar, your problem". At present, the IMF wants to end the hegemony of the dollar? Even if the existing international monetary system has been criticized, all sectors of society seem unable to reverse the status quo

previously, the IMF's share and governance reform in 2010 could not be passed due to repeated obstacles from the US Congress, which made the voting rights of China and other emerging market countries in the IMF unable to match their rising economic status

recently, Christine Lagarde, President of the International Monetary Fund (IMF), said in a statement that IMF staff had assessed that the RMB met the requirements of "freely usable" (Fu) currencies, and therefore recommended that the executive board include the RMB in the special drawing rights (SDR) basket

it is almost certain that the RMB will "enter the basket" on November 30, which will also be the first time that SDR has adjusted the composition of the basket since 2001. So, is the IMF's move to end dollar hegemony

Lagarde, President of the International Monetary Fund (IMF)

SDR is a reserve asset created by the IMF in 1969, which aims to make up for the shortage of dollars and gold in the Bretton Woods system, so as to ensure sufficient liquidity in the growing global trade and financial markets. At present, the SDR currency basket is composed of US dollar, euro, pound and yen, accounting for 41.9%, 37.4%, 11.3% and 9.4% respectively

the relevant person in charge of the people's Bank of China said on Lagarde's statement on the 14th: "the entry of RMB into SDR will help enhance the representativeness and attractiveness of SDR, improve the current international monetary system, and is a win-win result for China and the world."

it is undeniable that the expansion of the SDR basket will help to enhance the stability, representativeness and legitimacy of the SDR, and help the current international monetary system to develop into a more stable multi reserve currency system

China's currency enters the basket to improve the current international monetary system

in terms of stability, Indian economist Arvind? Arvindsubramanian previously pointed out that among the ten East Asian countries, non-standard experimental machines for various special purposes have been developed and can be manufactured according to the needs of users. The tightness between the currencies of seven countries and the RMB exceeds the US dollar. If the RMB appreciates by 1%, the currencies of these seven countries will appreciate by 0.55%, while the US dollar appreciates by 1%, and the currencies of seven countries will only appreciate by 0.34%

as for representativeness and legitimacy, Qiao Yide, vice president and Secretary General of the Shanghai Development Research Foundation, previously said: "at present, except that the euro replaced the German mark and the French franc in 2000, the composition of the SDR basket has not changed for a long time, which cannot reflect the changes in the pattern of world economic forces and the international use and trading of currencies. Therefore, it is necessary to expand the SDR basket to an appropriate scale."

Sir tomtroubridge, chairman of the China Business Department of PricewaterhouseCoopers UK, said: "the inclusion of the RMB in the SDR currency basket is an important step towards the internationalization of the RMB. The train has left the station."

he suggested that China learn from history and see the internationalization process of the US dollar after World War II. He said that after the Second World War, with the process of many American companies expanding the global market, American companies in Europe need to exchange dollars in the European offshore market and use the exchange dollars for mergers and acquisitions, thereby increasing the demand for dollars overseas

he said that some Chinese enterprises have gradually realized globalization, but China's banking industry is still lagging behind in globalization. Although China has the top five banks in the world in terms of global assets, only a small part of its business is overseas. He admitted that although it may take some time, the internationalization of RMB is more feasible only when Chinese banks are truly internationalized, resulting in more demand for holding RMB overseas

Louiskuijs, head of Asian Economics at Royal Bank of Scotland, also said in his report that although entering SDR is a milestone, it is not a decisive game for the internationalization of the RMB. In the foreseeable future, China will have to continue to convince foreign institutions and individuals of the benefits of holding RMB assets

paulmackel predicts that the inclusion of RMB in SDR will encourage China to continue financial and capital account liberalization reform, and the era of greater flexibility of RMB may come

for China, the entry of RMB into SDR is not only the recognition of the IMF for the process of RMB internationalization, but also China's commitment to continue to promote financial reform, including capital account opening

in fact, since this year, China's reform has been accelerated. The Central Bank of China approved a large number of overseas institutions to enter the inter-bank bond market at the end of April

On July 14, the central bank further announced that the quota of three types of overseas institutions, namely, overseas central banks, sovereign wealth funds and international financial organizations, to participate in the interbank bond market will be completed through the filing system without approval, and the scope of investment will be expanded to more varieties

The new round of RMB exchange rate reform on August 11 is even more milestone. The central bank announced that it would further improve the central parity quotation of the RMB exchange rate, which would refer to the closing exchange rate of the inter-bank foreign exchange market last day. At the same time, the short-term depreciation of the RMB was about 3%

markusrodlauer, deputy director of IMF Asia and Pacific Department, said at the meeting: "China is constantly transforming from a managed exchange rate system closely pegged to the US dollar to a more open, flexible and market-based exchange rate system. The RMB should be able to float freely within 2 to 3 years."

in addition, it is reported that the people's Bank of China may announce to extend the trading period of the inter-bank foreign exchange market from the current 16:30 to 23:30 in order to cover the European trading period and meet the requirements of SDR for extensive trading in "major global foreign exchange markets". The plan may be implemented before the end of November

the RMB will float freely in the near future

it is particularly worth mentioning that at the end of September, China announced its official foreign exchange data to the IMF for the first time, becoming one of the 96 countries that disclosed quarterly data, which greatly improved transparency. In October, China announced the adoption of the IMF special data dissemination standard (SDDs)

in terms of interest rates, the Ministry of finance will issue three-month book entry discount treasury bonds on a weekly basis from the fourth quarter. Technically, the SDR interest rate will be formed on the basis of the interest rate of the three-month Treasury bond, which constitutes the currency. An effective three-month Treasury bond market is one of the technical prerequisites for joining the SDR basket. Judging from the issuance of the first three-month discounted treasury bonds, the subscription is positive, and the interest rate also better reflects the short-term interest rate

The Central Bank of China is expected to continue to promote reform in the next stage around three aspects:

first, relax the restrictions on cross-border issuance of RMB bonds, not only relax the restrictions on panda bond issuers, but also support, especially for a government agency with a large number of enterprises and encourage domestic enterprises to issue RMB bonds abroad; Second, promote the two-way opening of the stock market, on the one hand, allow overseas institutions to carry out equity financing in China, on the other hand, officially launch the overseas investment pilot of qualified domestic individual investors; Third, continue to develop the RMB payment and settlement system

approving the entry of RMB into SDR may enable more countries to safely include RMB into their foreign exchange reserves

some countries, including France and Britain, have expressed support for the entry of RMB into SDR. According to British media reports, a spokesman for the Ministry of Finance said that the US government has always supported the entry of RMB into the SDR on the condition that it meets the standards of the IMF

RMB has arrived, standing at the door of the elite club of currency warriors, waiting to keep pace with the US dollar, Japanese yen, European dollar and pound

China has been increasing the weight of its currency in Global trade for a long time, promoting it as a payment currency and eventually making it a reserve currency. After being included in SDR, the status of RMB will take a big step forward, providing another option for central banks to increase foreign exchange reserves

the State Administration of foreign exchange of China

Standard Chartered group and AXA Investment Management predict that if the RMB is included in the SDR, at least US $1trillion of foreign exchange reserves will be converted into Chinese assets

according to the prediction of foreign exchange analysts, the global central bank's demand for RMB is as high as US $500billion. However, global foreign exchange reserves have been shrinking since last year

one trillion US dollars worldwide will be converted into Chinese assets

therefore, adding a sum of RMB to the shrinking foreign exchange reserves is an increase and decrease game: if the RMB balance increases, the central bank will reduce its holdings of other currencies

in the last century, the US dollar was the main settlement currency in international trade. When the euro zone was officially established, the dollar's share of the world's official foreign exchange reserves peaked at 71%. Since then, the proportion of the US dollar as the global reserve currency has been declining. In 2014, this proportion fell to 62.9%

with the development of history, this is not an ordinary thing. In fact, the global reserve currency has been changing since the Renaissance. The currencies of Portugal, Spain, the Netherlands, France and the United Kingdom have all become global reserve currencies at different times

in fact, only by deeply understanding the history of the rise of the dollar can we truly understand the law of today's dollar changes

The Bretton Woods system established in 1945 is the international monetary system established by the United States as the only superpower according to its will at the end of World War II

at that time, Britain, which was in the twilight of the west, sent the world-renowned economist Keynes to negotiate with white, a senior official of the U.S. Department of finance, to arrange that the impact experiment of metal materials in the post-war international monetary system was the main testing item in the production of modern metal materials, trying to maintain the glory of the former financial empire

The conference marks the establishment of the international monetary system centered on the US dollar - "Bretton Woods system", but strength determines the outcome of negotiations. Finally, the Bretton Woods Agreement on the international monetary system adopted by the 42 countries was completely designed by the United States

in fact, during the period from the establishment of the system to 1971, there were continuous contradictions in the operation of the Bretton Woods system. With the global dollar relative to gold surplus, the pressure on the dollar to exchange for gold is increasing day by day

in 1968, the United States was forced to agree to the creation of special drawing rights (SDRs) by the International Monetary Fund (IMF). For countries opposed to the Bretton Woods system based on the dollar standard, SDR is the first step towards the international legal tender. The purpose is that SDR can replace the dollar as the world's main reserve asset one day. But this goal has never been achieved

the United Nations Monetary and financial conference establishing the Bretton Woods system

after Nixon was re elected president in early 1973, he decisively announced the termination of the dollar gold standard system, the Bretton Woods system began to collapse, the international monetary system entered the Jamaican system stage, the floating exchange rate system replaced the fixed exchange rate, and the exchange rate between major currencies was determined by the market. However, the monopoly position of the US dollar in the international monetary system has not been weakened. Since the 1980s, the hegemony of the US dollar has been stronger than that of the Bretton Woods system

this is closely related to the huge economic aggregate of the United States, the inertia of the US dollar as the world's main reserve currency for a long time, and the US dollar becoming a commodity pricing currency. After the dollar lifted the shackles of gold, the United States root

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