Roubini: China's yuan 'set to usurp US dollar' as world's reserve currency

Professor Roubini, of New York University's Stern business school, believes that while such a major change is some way off, the Chinese government is laying the ground for the yuan's ascendance.

Known as "Dr Doom" for his negative stance, Prof Roubini argues that China is better placed than the US to provide a reserve currency for the 21st century because it has a large current account surplus, focused government and few of the economic worries the US faces.

More in the article.

This is an interesting scenario, that I know our own projectvxn has been talking about for a long time.

Thoughts?

It should have never been one country's currency in the first place.

It was our American dollars so we want to keep it that way, as we have reaped tremendous reward due to this, but it was at the expense of others.

If the Yuan was the big dog, we'd be trying to disrupt it as they are trying to disrupt ours.

Quite interesting.

China's financial system is more opaque than most people realize...its a shambles, and the country is corrupt. The only real advantage in those terms is that the rest of the world is not much better.

After World War I, the British Pound was still the world's reserve currency, but the US was on the rise as a manufactuing power house and had become the world's largest creditor nation (imagine that, now we are the largest debtors, but I digress...). Nevertheless, the US financial system was not strong enough yet for the dollar to take on the role of global reserve currency. The world faced an uneasy vaccum, follwed by a catestropic depression.

I think the balance between the US and China is at a similar inflection point. the US dollar is still the global reserve currency, reflecting past glories, but China is on the rise as a manufacturing giant and it has become the world's second-largest creditor (after Japan...and Japan's steep and continuning economic decline garantees that their No. 1 status in that regard won't last much longer). It is possible it could become the world's reserve, but (like the US in the post-WWI-years) it lacks the sophisticated financial infrastructure to play this role. The world thus faces another uneasy vaccum.

What strikes me as more likely, at least in the short-to-medium term, is that the world takes on some kind of basket of global currencies (and/or commodity/precious metals) to create a new financial instrument that will serve as a global reseve currency.

this is a stretch if you take what roubini says word for word

he says 15-20 years down the line..........i think we are moving to regional currencys and then if the PTB can avoid too much infighting and maintain a sense of direction as some of the older PTB die off.......then a world currency and perhaps just backed by credit.........if all heck breakes loose perhaps we will barter..........guns will be at a premium.... so will land a top a easily defended hillside

of course it could be somewhere in between lol but i wouldn't bet on it (in 20 years)

with all the corruption and frailities in human nature that our current system has ....it could be ALOT WORSE!

[edit on 15-5-2009 by cpdaman]

S and F !

For all those who think the U.S is the almighty along with the dollar - I hope you are waking up!

China has already forged relationships with other countries to begin trading in the yuan, including countries in S. America. This is not going to be far down the road - due to how we have printed our dollar as if there would be no really affect on it - well..... we will soon learn there is going to be ramifications.

A politician from Japan has said if he wins the elections - he would make purchasing U.S. Bonds contingent on them being in the Yen - not the dollar - due to not trusting the dollar anymore!

Wake up all those in the U.S. - the country is not the "best and the dollar is not the almighty" anymore! Get with it - think about it and Protect yourself for the coming of the dollar crash - with a BIG BOOM!

I like most of what Roubini has to say. He predited the stock market crash in 2007. That is one reason they call him Dr. Doom. He usually has sound advice and wouldnt make this comment unless he meant business. He is credible.

Hi....I know I sound like a broken record, but this is not surprising. I've been saying for sometime now that China is waging an economic war on the US in way we couldn't imagine. They talk about the breaches made by China and how our entire system has been compromised. That is what I have been basing my theories on, that is why I have been able to predict these movements on a pattern.

I've described that pattern many times before, I will again.

I'll start with this, because this is when China started using front companies in Korea and Vietnam to move a lot of US dollars and make it look like demand.

posted on 17-2-2009 @ 04:53 PM
www.abovetopsecret.com...

From the Up to the Minute Market Data thread:
www.abovetopsecret.com...

And then there's this:
www.abovetopsecret.com...

www.abovetopsecret.com...
You don't need to hold a lot of debt to hold a lot of dollars. Which they are using to buy the commodities they need to strengthen the yuan against the dollar in the coming months. This will make the Yuan more attractive to countries seeking to switch from the dollar through currency swaps. This is already starting in Argentina

And the one that puts a lot more in perspective:
www.abovetopsecret.com...

These posts should help keep things in perspective.

As far a 10-20 years down the line? Hah! yeah right. I give it 1 to 1.5 years or even less before the dollar collapses and the Yuan steps up.

en.wikipedia.org...
The SDR does not contain the Renminbi (sometimes referred to as Chinese Yuan), Indian Rupee, Australian Dollar or Canadian Dollar, which are important benchmark or secondary global reserve currencies.

Seeing as how the Western NWO wants to create a new world reserve using the SDR, China is now taking steps via currency swaps to make sure the SDR never reaches a level of stability to be able to do this. the Chinese have their own NWO type aspirations and it doesn't include us.

Think of it this way. The SDR is given value by the most unstable currencies on earth. Fiat. With the US dollar in the lead. This is why Australia has been noted to be making high end deals with the Chinese as of late... We are seeing a global restructuring of power. The Spear head will be China and the US is going to get the back of the bus treatment, if we're even allowed on at all.


[edit on 16-5-2009 by projectvxn]

[edit on 16-5-2009 by projectvxn]

I'd like to point everyone to this:
Credit of this find goes to JanusFIN

China to Hedge Dollar Risk with Gold as Yuan Moves Toward Reserve Currency

Again...I hate to sound like a broken record...I guess I should update that phrase to "skipping CD", but I digress.

China allows 2 banks in HK to sell yuan bonds

Two major banks outside mainland China said Tuesday they've become the first foreign companies granted approval to sell bonds in Chinese yuan - a step toward making it an international currency.

The banks - London-based HSBC Holdings ( HBC - news - people ) and Hong Kong-based Bank of East Asia ( BKEAF.PK - news - people ) - said in statements their subsidiaries in mainland China have been given permission by regulators to start issuing yuan-denominated bonds in Hong Kong.

Other details, including the amounts and timing of the offerings, weren't released.

It marks the first time firms based outside the mainland have been given the OK to sell such debt securities in Hong Kong, a move that furthers Beijing's goal of promoting the yuan as an alternative to the U.S. dollar for international trade and reserves.

Tight government controls largely restrict the yuan's use beyond China's borders, giving Beijing influence over the currency's exchange rate, though that's slowly changing.

Last month, the government announced plans to allow Shanghai and four other major cities to settle foreign trade in yuan - also known as the renminbi - rather than in dollars. The central bank has signed a string of agreements in recent months promising to lend yuan to Hong Kong, South Korea, Malaysia, Indonesia, Belarus and Argentina that could lead more firms importing from China to pay in yuan.

"The government is trying to become less reliant on U.S. dollars as a reserve currency, with a longer-term goal to make the renminbi a more global currency," said Kelvin Lau, regional economist at Standard Chartered ( SCBEF.PK - news - people ) Bank.

Letting HSBC and Bank of East Asia issue bonds in Hong Kong also meshes with Beijing's ambitions for its currency. Doing so helps develop overseas financial markets for the yuan, in turn boosting its liquidity and attractiveness among investors.

For the banks, it means more yuan to lend out and fund their own operations on the mainland.

"We believe that (a yuan) issue by HSBC China will help establish a representative pricing benchmark for foreign banks requiring funding, and will help the development of Hong Kong's offshore RMB market," Richard Yorke, chief executive of HSBC in China, said in a statement.

www.forbes.com...

Good content here-
I really liked vxn's assessment that roubini's dating is likely far out. I also find it interesting that you find China to be working against the emergence of SDR importance. I've read the growth in SDRs as also trying to include China more and more. IIf I was China I wouldn't take more power within their system either.

The Yuan-Dollar is hands-down one of the largest currency trading-blocs and I don't think the Yuan could just step in unscathed after the Dollar fizzles. The Chinese economists must be working very carefully to finesse this thing over say the next decade. I suppose diversifying their portfolio which is just what they're doing.

If you've ever been to the website of the People's Bank of China (China's CB), you'll think the Fed was as transparent as clean windows. It's like "By decree of your beneficent we've finance ministry, we have chosen 3% to be the interest rate for good fortune and blessing. Now go forth and produce! That is all." I think alot is lost in translation but they're running an odd vessel over their- one I personally would never want having global financial hegemony. But it never could anyways- the united CBs of the West can throw capital between each other for emergencies.