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China has agreed to buy the first International Monetary Fund bonds for about 50 billion dollars, the IMF said Wednesday.
IMF managing director Dominique Strauss-Kahn and the deputy governor of the People's Bank of China, Yi Gang, signed the agreement Wednesday at IMF headquarters in Washington, the multilateral institution said.
Under the agreement, the Chinese central bank "would purchase up to SDR 32 billion (around 50 billion dollars) in IMF notes," it said.
Originally posted by Hx3_1963
Guess that's why Shanghai is up ~5% huh???
The European Central Bank will leave interest rates at a record low and signal it’s in no rush to withdraw emergency stimulus measures as the economy shows signs of recovering from its worst recession since World War II, economists said.
G20 countries need to pre-plan for withdrawal of the monetary and fiscal stimulus that is fuelling global economic recovery but should not move on either front for much of the next year, the OECD's chief economist says.
U.S. retailers reported August sales that showed some signs that the economic downturn was easing, but a late Labor Day holiday and muted consumer enthusiasm weighed on results in the key back-to-school season.
Consumers still focused on essentials and saving money as they face uncertain job prospects, ravaged retirement savings and lower home prices, a trend that could continue to weigh on retailers in the all-important winter holiday season.
According to Thomson Financial, the bulk of retailers reporting sales so far have fallen short of analyst's estimates.
The inability of the government to continue pumping stimulus into the economy could promote a double-dip recession that will mean investment opportunities in longer-term government debt, Pimco's Bill Gross told CNBC.
As inflation becomes less a possibility due to the weakening economy, 10-year notes and 30-year bonds could provide solid investment opportunities, Gross, CIO of the world's largest bond fund, said in a live interview.
"To the extent that we have had a trillion dollars worth of stimulus, from the standpoint of deficits, and more, the government basically has to continue to do that and to add to that in order to keep the economy chugging along," he said. "To the extent that that's limited, to the extent that they pull back on some of those stimulus programs—Cash for Clunkers and those types of things—then the double-dip moves into the realm of possibility."
Originally posted by redhatty
Don't know if anyone posted this...
China to buy first IMF bonds for 50 billion dollars
China has agreed to buy the first International Monetary Fund bonds for about 50 billion dollars, the IMF said Wednesday.
IMF managing director Dominique Strauss-Kahn and the deputy governor of the People's Bank of China, Yi Gang, signed the agreement Wednesday at IMF headquarters in Washington, the multilateral institution said.
Under the agreement, the Chinese central bank "would purchase up to SDR 32 billion (around 50 billion dollars) in IMF notes," it said.
This is China's first open move to a "new" reserve currency
It’s a bad thing for Americans because for the past fifty years we Americans have benefited from a seniorage arrangement.
The worlds reserve currency was the dollar, something we could produce for essentially free. China has been at the forefront of the recent movement among some global players to move beyond the current system to a system where the world’s reserve currency is something other than the dollar. Today’s announcement of China buying IMF bonds is a step in that direction, the most concrete step so far I believe.
Once the dollar is no longer the world’s reserve currency then the U.S. will no longer have the seniorage advantage and we will lose all the benefits that accrue from seniorage.
Originally posted by marg6043
reply to post by stander
China is supporting the decision of the IMF to boost their output of SDR, see that was the plan when they meet on August 10, they were to start increasing the SDR output, this will do one thing and that is keep eroding the power of the dollar, that is what China wants.
Originally posted by marg6043
reply to post by stander
The IMF is outputing 250 billion dollars in which only 100 billions will go to needy countries with 20 only ot very poor ones to fight the global recession.
What they are planning with the rest? still China has a lot of liquidity in the form of USD why does they need FDRs for?.
The IMF relies, principally, on three main sources of funding: (1) loan repayments (interest charges) from debtor countries; (2) gold reserves; and (3) requested resources from its shareholders. The third group of funds largely come from developed, industrialized nations like the United States – the IMF's largest shareholder – and are in three forms: (a) quotas (dues paid by the Fund's member nations); (b) borrowing arrangements (loans the IMF borrows from creditor countries/members or from the private market); and (c) funds the IMF can pull from the Trusts (such as the trust for HIPC – Heavily Indebted Poor Countries initiative) – separate pools of assets that consist entirely of additional contributions (separate and distinct from quotas) made by member countries. It should also be noted that these sources provide for two principal types of costs: the costs of the loans themselves, and the IMF's operational costs. Operational costs range from surveillance, research gathering and technical assistance/advice provided to countries, to internal administrative costs (such as employee wages).
48 per cent of voting power at the IMF is in the hands of eight executive directors representing their own countries (USA, Japan, Germany, France, United Kingdom, Saudi Arabia, China, and the Russian Federation) while the other 176 member-states have 16 representatives with virtually the same voting power. At the WB the same executive nations apart from China again hold nearly half (46 per cent) of voting power. In the WTO, although all 144 member nations theoretically have a say, actual decision-making occurs in the "green room" - the small group meetings convened by the director-general and heavily influenced by Canada, the European Union, Japan and the United States. None of the countries listed above is in the southern hemisphere, and none is a 'developing' (poorer) country.