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What Happens If the Yuan Becomes a Reserve Currency?

Paul Donovan, UBS Investment Bank global economist, discusses the possibility of the yuan joining the IMF’s basket of reserve currencies and the outlook for the global economy with Bloomberg’s Joe Weisenthal on “What’d You Miss?”

10 Comments on "What Happens If the Yuan Becomes a Reserve Currency?"

  1. penury on Sat, 24th Oct 2015 1:39 pm 

    More U.S. centric propaganda/

  2. Rodster on Sat, 24th Oct 2015 3:19 pm 

    First off we don’t need anyone reserve currencies. If the Yuan replaces the USD, which I highly doubt aka next to impossible as the Yuan has a single digit use worldwide.

    Secondly, anyone who wants the Yuan as reserve currency need to look no further than the who is backing it. That’s right the same Country who built bridges and roads to nowhere, who CREATED $30-35 Trillion dollars worth of QE out of thin air, the same Country who has a more secretive and much larger shadow banking system than the West.

    Anyone putting their faith in the Yuan and China is begging for fools gold.

  3. Davy on Sat, 24th Oct 2015 4:00 pm 

    This appears to be the more plausible reason the Yuan is being blessed to be included in the SDR basket is this:

    “IMF Seen Approving Yuan As “Reserve Currency”

    The bottom line is that the “internationalization” and an increasing free float of the Yuan is bearish. And since the currency urgently needs even more devaluation as today’s PBOC rate cut confirmed, this may just be the IMF’s way of greenlighting even more devaluation for China’s currency. And since any devaluation would lead to a surge in capital outflows, what the IMF is doing is merely blessing the Yuan’s weakness while pretending it is in a position of strength, in an attempt to slow down the capital outflow as much as possible.

  4. marko on Sat, 24th Oct 2015 4:06 pm 

    They just try to continue this casino, but cannot last forever no matter what. If there is short interest in this everything is possible . I wouldn’t be suprise.

  5. Rodster on Sat, 24th Oct 2015 5:00 pm 

    “They just try to continue this casino, but cannot last forever no matter what.”

    That’s exactly my point. Even if the Yuan were to replace the USD nothing would change. It would still be the Eastern version of “three card Monte”.

    And yes, the IMF would like to include the Yuan in the SDR basket currency as the goal is to eventually have a one world currency and one world government.

  6. Davy on Sat, 24th Oct 2015 6:39 pm 

    Here are more reasons for worry with China and the Fed.

    “Systemic Fragility & The Fed’s “Hobson’s Choice”

    “Yet when it comes monetary stimulus fueling Bubbles and exacerbating structural imbalances, the U.S. is overshadowed by China. Spurred by a surge in state-directed bank lending, total Credit (“total social financing”) jumped back over $200bn in September. There are also indications that post-stock market Bubble reflationary measures have pushed China’s corporate debt Bubble to only more precarious excess. While many contend that the Chinese economy, markets and currency have stabilized, I see it much more in terms of ongoing unsustainable Credit excess.

    Chinese officials missed their timing for reining in Bubble excess by years. It’s now a Hobson’s Choice of throwing everything at the faltering boom. Brief thoughts: The Chinese will need a couple Trillion (in U.S. dollars) of new Credit over the next year, then the year after and so on. Throwing enormous amounts of new Credit at a terribly maladjusted system will ensure epic maladjustment and a Credit Time Bomb. Normally, such dynamics ensure significant currency debasement. I would think in terms of a Credit and Currency Peg Time Bomb.”

  7. makati1 on Sat, 24th Oct 2015 7:25 pm 

    The Yuan exchange use is growing fast. Much as some think China is going down, remember, if it goes, so goes the Empire built on debt to the rest of the world. Those T-bills will fly home and take down the house of cards called Wall Street. End of globalization. End of the Us as a pretend 1st world country. The Us will no longer be able to pretend it is not a 3rd world banana republic with a dictator at it’s head.

    Russia, China, and others, are working to take down the petrodollar in the new world war 3. They know that if they can lessen its ability to control the world’s financial system, it will not be able to pursue it’s goal of world domination. I wish them success. financial destruction is better than physical.

  8. apneaman on Sun, 25th Oct 2015 8:03 pm 

    Chinese Property Developer Snaps Up Texas Oil Fields

  9. Davy on Mon, 26th Oct 2015 7:53 am 

    We are near a “step down” where the unreality of the global financial narrative breaks down. That narrative is the underlying perception that all confidence is based on. How will this filter down to the actual nuts and bolts of life. How long will this decline take and how deep will it go? Ultimately when will the food chain be disrupted? This is where all this is heading so buckle up for dysfunction, the irrational, and plenty of economic abandonment.

    I feel sorry for the corns living in denial. Doomers will at least be ahead of the game being ready with a more correct attitude. This is not to say doomers will not suffer any less it just means doomers will react with better decisions because they are not clouded by unreality.

    “Our Data Is Not Good” – US Companies Warn That A Recession Is Coming”

    “Earlier this month, we highlighted comments from new Fastenal CEO (and former CFO) Dan Florness who, on the company’s Q3 call, took homage to one analyst’s suggestion that we’re currently in a “non-recessionary environment.” Here, as reminder, is the exchange:

    William Blair’s Ryan Merkel: Then just lastly, Fastenal growing zero percent here in September and in a non-recessionary environment, it’s pretty surprising, I think, for a lot of us. Florness: The industrial environment is in a recession – I don’t care what anybody says, because nobody knows that market better than we do. You know, we touch 250,000 active customers a month.”

  10. Richard Ralph Roehl on Mon, 26th Oct 2015 4:07 pm 

    Video doesn’t work with Samsung Galaxy Note 5.

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