Author: jimmy67

Are Asian central banks using RMB as reserves now? [Copy link] 中文

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Post time 2007-11-18 23:56:38 |Display all floors
CD,

The dollar needs to dive. Unlike China, US currency policy is about maintaining internal conditions, not exchange rates.
"Justice prevails... evil justice."

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Post time 2007-11-19 01:15:56 |Display all floors
Wow... Tong said something right... it got very cold somewhere.

Anyhow, that's correct. Until the RMB is freely convertible, its only value in currency reserves is to maintain enough RMBs for limited purposes. A reserve currency allows a country to do several things, from hand out foreign exchange to being able to spend the reserve to hold the currency in place, but these things can't be done when a currency isn't freely convertible because they all require being able to convert the currency. In addition, capital markets for mainland China (may as well call it the "renminbi zone") are closed to foreigners as direct investors. That prevents the most common method of holding reserves, by holding liquid securities denominated in the target currency.

We could equate the difference between holding RMB for "merely practical" reasons and as a reserve currency with the difference between having a few RMB in your wallet v. having a forex fund including it.
"Justice prevails... evil justice."

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Post time 2007-12-27 13:47:51 |Display all floors

Reply #93 interesting's post

ha ha ha

that's true, without convertibility, how'd can it be a reserve currency!
anyway it's interesting that Central Bank are issuing Rmb paper in Hong Kong!
is this the "baby steps" before full convertibility!

probably Central government is worried about the size of the Chinese economy and the acceptance of it's currency by regional or global powers!

still a long long way to go!
enough time for the Amerikan Regime to adapt!


Green DRagon
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