Joel Rathus from Adelaide University is arguing that Asia’s monetary future lies with the internationalisation of the yen, the Japanese currency, not with the internationalisation of the Chinese currency, the yuan or renminbi. (1)

On 15 July 2009, Rathus was arguing
that what is not usually raised in the discussion of China’s (high profile) criticism of the USD is that China is not the first Asian giant to propose that the world, or at least the region, move away from the dollar as the intermediate currency of choice
and
that as Japan’s IIMA points out, Japanese Yen is still a more suitable currency to inherit part of the USD mantle than the Chinese yuan. (2)

Let me show why the debate concerns the internationalisation of the yuan or renminbi, and not yen internationalisation.

China is increasing its gold reserves in order to achieve FreeGold, a freely floating price of Gold as an alternative to the dollar regime. FreeGold makes Gold the natural vehicle to temporarily or eternally store one’s wealth in, in order to be able to later convert it into tangible wealth.

Four of the six Gulf Co-operation Council (GCC) states will in 2010 set up the Gulf Monetary Council (GMC), a precursor to the Gulf Central Bank which, the latter, will issue the GCC single currency. (3)  As oil, the GCC commodity par excellence, is the only commodity in the world that is large enough for Gold to hide in, Gold is hiding in there. (4)

China is seeking to set up a free-trade zone with the GCC. (5)

By 2010, when the GMC will be set up, China will be in a free-trade-zone with the Association of South-East Asian Nations (ASEAN). (6)

In 2010, ASEAN will also have free-trade zone with India. (7)

Still, Rathus is arguing that the debate concerns yen internationalisation,
not the internationalisation of the yuan or renminbi.

The Chinese want the world to know that they are increasing their Gold reserve in order that the product (the “fruit”) of their wealth be consolidated with a view to further fructifying. (8)

If FreeGold were to be further postponed, the dollar-regime will only be further marginalised. At the end of the day, the regime will then fall into disuse. Tomorrow, it will no longer be possible to compromise between the dollar and Gold. Overthrowing the dollar regime will no longer even be necessary. (8, again)

Ivo Cerckel
honestmoney@maktoob.com
http://twitter.com/ivocerckel/

NOTES

(1)
Japan, the DPJ and regional financial arrangements
August 11th, 2009
Author: Joel Rathus, Adelaide University
http://www.eastasiaforum.org/2009/08/11/japan-the-djp-and-regional-financial-arrangements/
http://www.eris-in-asia.blogspot.com/

(2)
Wednesday, 15 July 2009
Internationalisation of the Yuan (not the Yen)
http://eris-in-asia.blogspot.com/2009/07/internationalisation-of-yen-yuan.html

(3)
Four Gulf states sign deal on monetary union
By Paul Handley (AFP) – Jun 7, 2009
http://www.google.com/hostednews/afp/article/ALeqM5hunVGu3zlcK6uA_cia8bmLdrk4KQ
SNIP
RIYADH (AFP) — The oil-rich Gulf Cooperation Council took a major step towards a single currency union on Sunday when four members signed a pact to create a joint monetary council after years of hesitation.\

(4)
http://bphouse.com/honest_money/gold-and-oil/

(5)
Leaders: China seeks friendly ties with Islamic countries
http://news.xinhuanet.com/english/2009-08/14/content_11883651.htm
SNIP
BEIJING, Aug. 14 (Xinhua) — China would cement friendship and cooperation with the Islamic countries based on the Five Principles of Peaceful Co-existence, President Hu Jintao said Friday afternoon.
+
Chinese Premier Wen Jiabao also met with the crown prince on Friday.
+    [Wen] said China would like to actively consult with the Gulf Cooperation Council (GCC) for early consensus on signing a free trade pact.

(6)
China, ASEAN to have full free-trade area by 2010
http://news.xinhuanet.com/english/2009-08/11/content_11864830.htm
SNIP
BEIJING, Aug. 11 — China-ASEAN (Association of Southeast Asian nations) Free Trade Area would be completely operative in 2010 as scheduled, according to sources from the Fourth Pan Beibu Gulf Economic Cooperation Forum held recently in Nanning city, the capital of south China’s Guangxi autonomous region.

(7)
India signs partial free-trade pact with ASEAN (Roundup)
Business News
Aug 13, 2009, 10:29 GMT
http://www.monstersandcritics.com/news/business/news/article_1495230.php/India-signs-partial-free-trade-pact-with-ASEAN-Roundup
SNIP
Bangkok – The Association of South-East Asian Nations (ASEAN) Thursday signed a partial free-trade agreement with India which is expected to boost annual bilateral trade by an estimated 13 billion dollars over the next six years.

(8)
Chinese Mercantilism?
Posted by Ivo Cerckel on April 25th, 2009
http://bphouse.com/honest_money/2009/04/25/chinese-mercantilism/