The Yuan as a Reserve Currency?
In spite of all the hype regarding the Yuan as a reserve currency I have stated many times recently that discussion of the Yuan as a reserve currency is nothing but ridiculous hype.
My reasons are:
- The Yuan does not float, and there is no indication China is prepared to allow the Yuan to float any time soon
- China is a command economy
- In China, property rights and civil rights are questionable
- Chinese banks are insolvent because of malinvestments in infrastructure and an enormous property bubble
photo credit: LoneGunMan[I]f reserve currency status was such a gift, why doesn’t China take the steps that would make it possible. Why doesn’t Europe?
The fact is, for all their bitching, nearly every country on the planet does not want to relinquish their “export growth model”. Every week there is some trumped-up report by someone about how China is trading more in the Yuan with Russia and Southeast Asia countries. In the grand scheme of things such trade in Yuan nearly meaningless, not representative of a significant adjustment.
“Bogus Threats to US Reserve Currency Status: No Country Really Wants It!” by Mike Shedlock, MISH’S Global Economic Trend Analysis, April 27, 2011
china financial markets – Michael Pettis
WheresGeorge.com
Tags: dollar, Michael Pettis, Mike Shedlock, Mish, Reserve Currency, WheresGeorge.com, Yuan, Yuan as a Reserve Currency
