Comments on: The PBoC’s call for a new global currency, the SDR, the US and the IMF http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/ Sat, 21 Nov 2009 16:40:10 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Special Drawing Rights : The Incidental Economist http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/#comment-132263 Special Drawing Rights : The Incidental Economist Sat, 20 Jun 2009 20:14:11 +0000 http://blogs.cfr.org/setser/?p=5061#comment-132263 [...] were issued, an idea supported by Martin Wolf and George Soros. The confusion may have stemmed from misinterpretations of a white paper by the People’s Bank of China governor Zhou Xiaochuan and statements by US [...] [...] were issued, an idea supported by Martin Wolf and George Soros. The confusion may have stemmed from misinterpretations of a white paper by the People’s Bank of China governor Zhou Xiaochuan and statements by US [...]

]]> By: Random Links XXXVIII « Random Musings of a Deranged Mind http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/#comment-130165 Random Links XXXVIII « Random Musings of a Deranged Mind Mon, 11 May 2009 02:56:34 +0000 http://blogs.cfr.org/setser/?p=5061#comment-130165 [...] Dollar Crash Watch: Why PBOC’s call for SDRs doesn’t necessarily doom the dollar. [...] [...] Dollar Crash Watch: Why PBOC’s call for SDRs doesn’t necessarily doom the dollar. [...]

]]> By: Siguiendo al YEN - P http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/#comment-128743 Siguiendo al YEN - P Sun, 05 Apr 2009 12:39:25 +0000 http://blogs.cfr.org/setser/?p=5061#comment-128743 [...] G20 al descubierto.- DEG Escribe Fernando Mart [...] G20 al descubierto.- DEG Escribe Fernando Mart

]]> By: DOR http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/#comment-128578 DOR Wed, 01 Apr 2009 01:58:39 +0000 http://blogs.cfr.org/setser/?p=5061#comment-128578 Twofish, Thanks for the clarification on the Xinhua / Renmin Ribao reproduction of Zhao’s article. Twofish,

Thanks for the clarification on the Xinhua / Renmin Ribao reproduction of Zhao’s article.

]]> By: Judy Yeo http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/#comment-128577 Judy Yeo Wed, 01 Apr 2009 01:09:32 +0000 http://blogs.cfr.org/setser/?p=5061#comment-128577 Brad could what Zhou be proposing be nearer to the the idea of a currency board, with the idea of making the global currency market more equitable? after all when the de facto currency is tied to a particular country, there are always problems with fairness, perceived or otherwise. as for the contrast with the asian financial crisis- well, the us dollar wasn't exactly in the same gyration mode then was it? as for "China currently isn’t willing to tell the IMF the currency composition of its reserves. And now it seems to be hinting that it might allow the IMF to manage a portion of its reserves!****" There are at least 3 implications to that situation. By letting the IMF manage part of its reserves doesn't mean the currency composition of its total reserves will be made known- remember the fable of the 3 blind men and the elephant? By handing over part of its reserves to the management of the IMF , it could well be handing over the thorniest problem in its economic stable; when the crap hits the fan , guess who's gonna be the stable boy?! As for such a proposal being implemented, do you think China will go it alone? hardly likely, more possibly it will rope the USA in as well, can you imagine the country with the de facto currency being corralled into creating or handing over part of its reserves to an international body more international representation! Hmm... doesn't sound that good now does it? Brad

could what Zhou be proposing be nearer to the the idea of a currency board, with the idea of making the global currency market more equitable? after all when the de facto currency is tied to a particular country, there are always problems with fairness, perceived or otherwise. as for the contrast with the asian financial crisis- well, the us dollar wasn’t exactly in the same gyration mode then was it?

as for “China currently isn’t willing to tell the IMF the currency composition of its reserves. And now it seems to be hinting that it might allow the IMF to manage a portion of its reserves!****”

There are at least 3 implications to that situation. By letting the IMF manage part of its reserves doesn’t mean the currency composition of its total reserves will be made known- remember the fable of the 3 blind men and the elephant? By handing over part of its reserves to the management of the IMF , it could well be handing over the thorniest problem in its economic stable; when the crap hits the fan , guess who’s gonna be the stable boy?!
As for such a proposal being implemented, do you think China will go it alone? hardly likely, more possibly it will rope the USA in as well, can you imagine the country with the de facto currency being corralled into creating or handing over part of its reserves to an international body more international representation!

Hmm… doesn’t sound that good now does it?

]]> By: Twofish http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/#comment-128523 Twofish Tue, 31 Mar 2009 15:21:31 +0000 http://blogs.cfr.org/setser/?p=5061#comment-128523 charles: As the new SDR would includes CNY, China would be able pay for the commodities it imports with Chinese Govt bills or bonds. And THAT is the big prize ! I really don't think so. China can do the same thing with currency swaps. charles: As the new SDR would includes CNY, China would be able pay for the commodities it imports with Chinese Govt bills or bonds. And THAT is the big prize !

I really don’t think so. China can do the same thing with currency swaps.

]]> By: Twofish http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/#comment-128522 Twofish Tue, 31 Mar 2009 15:19:55 +0000 http://blogs.cfr.org/setser/?p=5061#comment-128522 What I think that China is planning on doing is that if China gives the IMF 100 to 200 billion in US dollars in exchange for SDR's issued by the IMF, then if there some of the currency losses they get eaten by the IMF rather than by China. What I think that China is planning on doing is that if China gives the IMF 100 to 200 billion in US dollars in exchange for SDR’s issued by the IMF, then if there some of the currency losses they get eaten by the IMF rather than by China.

]]> By: Twofish http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/#comment-128521 Twofish Tue, 31 Mar 2009 15:17:26 +0000 http://blogs.cfr.org/setser/?p=5061#comment-128521 YZ and DOR incorrect. Zhou's comments were very widely reported in Xinhua and the People's Daily in the finance sections. They weren't reported on the front page with trumpets blaring, but that is significant because it means that the Chinese government considers this an issue that should seriously be thought about and debated rather than an issue on which they have already made up their minds on. YZ and DOR incorrect. Zhou’s comments were very widely reported in Xinhua and the People’s Daily in the finance sections.

They weren’t reported on the front page with trumpets blaring, but that is significant because it means that the Chinese government considers this an issue that should seriously be thought about and debated rather than an issue on which they have already made up their minds on.

]]> By: bsetser http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/#comment-128492 bsetser Tue, 31 Mar 2009 04:30:31 +0000 http://blogs.cfr.org/setser/?p=5061#comment-128492 DoR -- the RMB sure seems to have been repegged to the dollar last summer ... look at the last 8 months rather than the last 45 ... there have been three broad phases of rmb management since june 05: -- the initial period of very modest appreciation, no matter what the $ did v other currencies -- the period in late 07/ early 08 when the pace of rmb appreciation v the USD accelerated -- the period from the summer on when rmb appreciation stopped/ the forward market started pricing in a rmb depreciation. DoR — the RMB sure seems to have been repegged to the dollar last summer … look at the last 8 months rather than the last 45 …

there have been three broad phases of rmb management since june 05:

– the initial period of very modest appreciation, no matter what the $ did v other currencies
– the period in late 07/ early 08 when the pace of rmb appreciation v the USD accelerated
– the period from the summer on when rmb appreciation stopped/ the forward market started pricing in a rmb depreciation.

]]> By: Indian Investor http://blogs.cfr.org/setser/2009/03/29/the-pbocs-call-for-a-new-global-currency-the-sdr-the-us-and-the-imf/#comment-128491 Indian Investor Tue, 31 Mar 2009 03:02:45 +0000 http://blogs.cfr.org/setser/?p=5061#comment-128491 Brad: the rmb’s management is very relevant as any chinese sales of dollars for other currencies would have the effect of driving the rmb down v those other currencies so long as the rmb is pegged to the dollar. plenty of coutnries supposedly have told china they don’t want china to shift its reserves in their direction for this reason. Me: Suppose China decides to sell off, say $500 b of its Treasury Bonds and $ 200 b of its Agencies - and change them for a combination of Roubles, EUR & JPY. Meanwhile they continue to buy sufficient USD to keep the RMB/USD steady. The effect would be to strengthen Roubles, EUR and JPY against the USD. Meanwhile RMB/USD would remain the same, by policy. Also, I don't know what the effect would be on RMB/EUR, RMB/JPY, etc. As far as I can see, there's no effect. If you're a foreign country paying for your imports in USD, the weaker the USD the better it is for your importers.Of course it's the other way round for the US itself. As far as the Euro area is concerned - they benefit from weaker USD since their imports are dollar-denominated and most of them aren't heavily dependent on exports to the US. Brad: the rmb’s management is very relevant as any chinese sales of dollars for other currencies would have the effect of driving the rmb down v those other currencies so long as the rmb is pegged to the dollar. plenty of coutnries supposedly have told china they don’t want china to shift its reserves in their direction for this reason.

Me: Suppose China decides to sell off, say $500 b of its Treasury Bonds and $ 200 b of its Agencies – and change them for a combination of Roubles, EUR & JPY. Meanwhile they continue to buy sufficient USD to keep the RMB/USD steady. The effect would be to strengthen Roubles, EUR and JPY against the USD. Meanwhile RMB/USD would remain the same, by policy.
Also, I don’t know what the effect would be on RMB/EUR, RMB/JPY, etc. As far as I can see, there’s no effect.
If you’re a foreign country paying for your imports in USD, the weaker the USD the better it is for your importers.Of course it’s the other way round for the US itself. As far as the Euro area is concerned – they benefit from weaker USD since their imports are dollar-denominated and most of them aren’t heavily dependent on exports to the US.

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