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  1. #1
    Atomic Punk bklynboy68's Avatar
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    Default China welcomes IMF backing to make yuan world reserve currency

    China on Saturday welcomed backing from IMF experts that the yuan should be included in its reserve currencies, saying the move would strengthen the world's financial system.

    Now the world's second-largest economy, China asked last year for the yuan to be added to the elite basket of SDR currencies, but until recently it was considered too tightly controlled to qualify.

    It now looks likely the yuan will be formally admitted to the IMF's "special drawing rights" currency basket at the end of the month, which would mark a milestone in China's efforts to become a global economic power.

    IMF chief Christine Lagarde said the fund now deemed the yuan "meets the requirements to be a 'freely usable' currency" -- a key hurdle to joining the yen, dollar, pound and euro as a leading unit in international trade.

    The yuan hit headlines in August when China's central bank devalued the currency and said it would use a more market-oriented system to calculate the point around which the currency can trade each day.

    The move sent markets into a tailspin as investors took it as a sign of slowing growth in China, a key driver of the world economy, but the central bank on Saturday said such reforms had taken it closer to joining the SDR basket.

    "China thinks that the inclusion of the RMB (yuan) into the SDR basket will strengthen the representativeness and the attraction of the SDR (and) that it will improve the existing international monetary system," the People's Bank of China (PBoC) added.

    "It will have win-win benefits both for China and the world."

    - Yuan's rapid rise -

    The yuan has rapidly grown in importance in recent years as China -- the world's top trading nation -- has used it to settle more of its commerce, and made it directly convertable with more currencies.


    Including the Chinese currency in the SDR would likely boost demand for yuan-denominated assets among central banks, and give it a sheen of respectability at a time when many investors are questioning Beijing's ability to manage the slowing economy.

    Lagarde said IMF experts ruled Beijing had addressed "all remaining operational issues" required for SDR inclusion, which will be decided by the executive board at a November 30 meeting.

    "I support the staff's findings," she said, adding to expectations that the board will also back the yuan.

    That would mark an about turn from the beginning of August -- before the yuan devaluation -- when the Fund said the currency was not freely usable enough to be included in the basket.

    Despite the recent misgivings, there has been strong pressure for the IMF to act now as the SDR basket is only reviewed every five years.

    If a decision to include the yuan is made this month, the actual inclusion could take place as late as September 30, 2016, giving Beijing more time to prepare.

    The recommendation Friday was broadly backed by the United States, China's main rival for world economic supremacy.

    "We intend to support the renminbi's inclusion in the Special Drawing Rights basket provided the currency meets the International Monetary Fund's existing criteria," the Treasury Department said, using another name for the yuan.

    "We will review the IMF's paper in that light."





    http://news.yahoo.com/imf-experts-re...010527771.html
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  2. #2
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    Considering China has been buying up all the physical gold it can in recent years, I'm not surprised...
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  3. #3
    Atomic Punk bklynboy68's Avatar
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    Chinese yuan likely to be added to IMF special basket of currencies

    China hopes stamp of approval will improve yuan’s desirability among investors and undermine hegemony of US dollar as global reserve currency


    The IMF will vote on Monday whether to include the yuan, also known as the renminbi), as the fifth member of its special drawing rights currency basket.

    Sunday 29 November 2015

    China’s efforts to make the yuan an international currency on a par with the US dollar are to receive a fillip with the International Monetary Fund widely expected to add it to a special basket of global currencies.

    Analysts say the shareholders in the Washington-based IMF will vote on Monday to include the yuan, also known as the renminbi, as the fifth member of its special drawing rights currency basket alongside the dollar, the Japanese yen, sterling and the euro.

    China has been lobbying for the IMF to add the yuan to its basket of reserve currencies, which it uses to lend to sovereign borrowers. A vote to include the currency in the SDR basket would mark a significant milestone for Beijing, according to experts.

    China ends three days of yuan devaluation

    “The direct impact won’t be felt in the near term, not least because implementation of the new basket won’t be until Q3 2016. However the symbolic importance cannot be overlooked,” said Andrew Malcolm, Asia head of capital markets at law firm Linklaters.

    “By effectively endorsing the renminbi as a freely useable currency, it sends a strong signal about China’s importance in the global financial markets.”

    The vote of confidence in the yuan as a world reserve currency will come as welcome relief to Chinese authorities as they seek to allay investor fears about China’s economy and turmoil in its stock markets.

    Beijing has long hoped the yuan would be added to the small list of currencies in which member-countries’ claims on the IMF are denominated. China hopes this stamp of approval will increase the yuan’s desirability as a reserve currency for investors and undermine the hegemony of the dollar as a global reserve currency.

    Shares in China had soared 150% in the 12 months to mid-June this year as individual investors piled into the rising market, often borrowing heavily to do so. But stocks tumbled over the summer, despite a series of measures by officials in Beijing aimed at calming market jitters. There was another slump in stock markets last week as regulators appeared to clamp down further on leveraged buying.

    Amid the summer turmoil, Beijing’s surprise devaluation of the yuan was seen partly as a move towards allowing the market, instead of the government, to fix the the currency’s value, an important precondition for inclusion in the SDR basket.

    The credit ratings agency Fitch was among those predicting the IMF executive board would opt to include the yuan in the basket of elite currencies. It wrote in an update on China last week that the yuan was expected to see widespread adoption as a reserve currency globally.

    On the expected IMF move, the ratings agency said: “Fitch does not expect this to lead to a material shift in demand for renminbi assets globally in the short term. Over time, the emergence of the renminbi as a global reserve currency could support the credit profile.”

    Analysts at the Japanese bank Nomura predicted that the yuan will become one of the top three major international currencies – a peer to the US dollar and the euro – by 2030. They estimate the yuan will make up 10% of the IMF’s SDR basket.



    http://www.theguardian.com/business/...cies-us-dollar
    Last edited by bklynboy68; 11.30.15 at 02:48 AM.
     "He has a swaggering retro machismo that will give hives to the Steinem cabal" -Camille Paglia on Donald Trump

    "Make way for the bad guy"- Tony Montana

    'This hamburger don't need no helper"- David Lee Roth

    "I wish Bon Jovi would've given me a call before he recorded all of his hits, because the lyrics would've been smarter, the melodies would've been much more smashing, and they would've sold a lot fewer records." -David Lee Roth

    "My beef is people thinking Bon Jovi is good cuz they sold lots of records to housewives." -tango

    "But being number one doesn’t really mean jack fuck all. We sold twice as many records as other records that year (1984) that landed in the Number One position." ~Eddie Van Halen

 

 

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