Yuan, not Yen, internationalisation
Posted by Ivo Cerckel on August 16th, 2009
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/
No related posts.
August 16th, 2009 at 14:27
The question is:
What is the value of the yuan, c.q. the yen?
This raises the question of the yuan’s, c.q. the yen’s, reserves.
The question is NOT:
What is the value of the Chinese c.q. Japanese economy?
Anyway, the Japanese economy is dead. (1)
Right, the Chinese economy also. (2)
But the Bank of China has Gold reserves.
Bloomberg on Friday: China May Boost Energy, Mining Acquisitions by Half (Update 2) (3)
Ivo Cerckel
NOTES
(1)
Japan Is Fading
One thing the nation’s next leaders don’t talk about is growth.
Kim Kyung-Hoon / Reuters-Landov
Fading: Confidence Japan’s government continues to decline.
By Rana Foroohar | NEWSWEEK
Published Aug 15, 2009
From the magazine issue dated Aug 31, 2009
http://www.newsweek.com/id/212121
(2)
Credit tightening threatens China’s ‘giant Ponzi scheme’
China’s loan growth plunged in July while exports fell 23pc from a year ago after grinding lower for nine months as consumers in the West tighten their belts further.
(3)
China May Boost Energy, Mining Acquisitions by Half (Update2)
By John Duce
Friday, August 14, 2009
http://www.bloomberg.com/apps/news?pid=20601109&sid=aTZisOrCq1BY
August 16th, 2009 at 17:40
Another reason is of course that Japan is still a dollar hostage.
August 16th, 2009 at 18:03
It would appear that the general public is losing its confidence in guv’mint
and
is looking for private protection against fraudulent auditors and regulators
who didn’t double-check information Bernard Madoff’s firm gave them.
Japan is still a dollar hostage.
Therefore, we need Yuan, not Yen, internationalisation.
August 16th, 2009 at 18:33
Like Japan, the United Arab Emirates is still a dollar hostage.
UAE central bank governor Al-Suweidi is reiterating his confidence in the US authorities to solve the crisis they created. (1)
As European Central Bank president, the late Dr Willem F Duisenberg, said in 2002,
money represents the confidence that we place in each other. (2)
Ivo Cerckel
NOTES
(1)
UAE will see strong growth in 2010 – central bank
by Tamara Walid on Sunday, 16 August 2009
http://www.arabianbusiness.com/564945
http://business.maktoob.com/20090000364982/UAE_to_see_strong_economic_growth_in_2010/Article.htm
SNIP
[United Arab Emirates central bank governor] Suweidi reiterated the dirham would remain pegged to the U.S. dollar despite fluctuations in the currency.
“The UAE has significant foreign investments and the dollar remains an important currency,” he told the paper. (Reuters)
(2)
International Charlemagne Prize of Aachen for 2002
Acceptance speech by Dr. Willem F. Duisenberg, President of the European Central Bank, Aachen, 9 May 2002
http://www.ecb.eu/press/key/date/2002/html/sp020509.en.html
August 16th, 2009 at 18:47
The United Arab Emirates, which will not participate in the GCC Monetary Council, is therefore keeping the UAE dirham pegged to the US of A dollar.
http://www.arabianbusiness.com/564945
http://business.maktoob.com/20090000364982/UAE_to_see_strong_economic_growth_in_2010/Article.htm
August 17th, 2009 at 12:51
The yuan, the emerging hard currency
China-ASEAN Looking to New FTA, and Decoupling from US and EU
By CSC staff, Shanghai,Published:August 17,2009
http://www.chinastakes.com/2009/8/china-asean-looking-to-new-fta-and-decoupling-from-us-and-eu.html
SNIP
The decoupling process may be strengthened by an emerging hard currency in the region, China’s
yuan. ASEAN has been China’s fourth largest trade partner. China wants to test its strategy of
making the yuan a trade settlement currency in the FTA. In 2008, China-ASEAN trade reached US$231.12
billion, over 1 trillion yuan. Once the FTA is launched in 2010, the total trade among China and
ASEAN members should reach US$4.5 trillion. Yuan trade settlement will bring business to financial
institutions in the area.