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Pakistan nearly trades its economic sovereignty in currency swap arrangement with China

I will focus anything I needed to... Who the he.l are you to advise me??
You first stop worry about my toilet...
No bro , toilet is must specially for all tye indians , imagine it , you running with load commin outa ya , half pants while , lecturing indian economic supermcey ???lol
God that ill.be epic ?lolzx
 
Why don't you throw away your 3 trillion dollars in reserves first?


Just one question though, how do you swap your currency? Are you giving the Chinese pkr in exchange for RMB?


Not only that, Chinese traders will end up with PKR, which is losing its value and Pakistani traders will end up with Yuan, which is appreciating. Its the Chinese traders who will be in losing proposition in this deal. No wonder they opposed this earlier.

Now only thing that is different this time is that they are pumping in 50 billion dollars worth of investment into Pakistan which is a blessing for Pakistan. It is being used by Pakistan to service their debt and oil imports in dollars. Now if they switch to Yuan then Pakistan will have difficulties meeting their debt obligations. Also their imports from other countries will be affected.

In one sense Pakistan is losing its leverage regarding where they get their imports from and will have to solely depend on China.
 
How does trading in $US not equals selling sovereignty but using Yuan is?
 
Seems like either the writer do not have any idea how the international money market works or he deliberating the fact that in international transaction PKr already has no standing. For all our international transactions we are using dollars, for example, all the CPEC projects are not in RMB or PKR but in Dollars... This attempt is to avoid this third party transaction and save this cost ...

In short we are replacing USD with RMB and China is also replacing USD with PKR ...

So now going forward Pakistanis will be able to procure goods directly in RMB and they will pay from PKR account and banks will convert those PKR directly into RMB ... As per previous practicce we had to purchase Dollars and pay for the goods in dollars whereas Chinese exporters will then convert those dollars into RMB and hence USA was getting the benefit (in the shape of financial sector boom) without any cost ...

Another way of looking at it now Chinese will be able to purchase directly with Pakistan as their bank will be able to settle the transactions with Pakistan in PKR and hence not only the transactions will become fast but also less costly in terms of exchange rates ...

For Pakistan we will definitely have a better access to a market of 1 billion plus people... Now its upto our business community that how can they benefit from this financial ease ...
If it's true then it's the time to panic....

If I were an NYC banker I'ld have called my buddy at the Pentagon to "do more".....
 
World Tara Kartha Jan 06, 2018 13:30:41 IST



The State Bank of Pakistan made a rather strange announcement a few days ago. A notice by the bank informed the public that the bank had carried out comprehensive policy related measures to ensure that both private and public sector enterprises could use the Chinese yuan for bilateral trade and investment activities. Even more puzzling to financial circles was the earlier announcement by the Foreign Office spokesperson that the two countries would "actively" use bilateral currencies for trade and investment. The problem is that the bilateral currency swap agreement between the two countries was signed during the time of prime minister Yousaf Raza Gilani well over six years ago. Apparently, that never really took off, with Chinese traders refusing to accept Pakistani currency for any kind of swap or otherwise.


Yuan. AFP



The original agreement signed in 2011, was for a period of three years and should have normally have been renewed without too much fanfare or discussion in the media. However, a number of other allied events made the announcement interesting in terms of Pakistan-China relations. Firstly, the announcement came as part of the signing of a new Long Term Plan(LTP) 2017-30 in the second week of December. Even while extolling the many opportunities presented by the plan, Minister for Planning and Development Ahsan Iqbal struck a note of caution, clarifying that even while the currency swap would facilitate the growth of the China-Pakistan Economic Corridor, the yuan would not be used inside Pakistan. This was in reference to a furore created earlier when at a Senior Officials Meeting (SOM) to discuss the LTP, the Chinese side was reported to have demanded that its own currency could be made legal tender in the Gwadar Economic Zone. The move was opposed by both the Ministry of Finance and the State Bank as an infringement of sovereignty, which it would certainly have been. The only other known country that uses Chinese currency as a legal tender in Zimbabwe after its own currency collapsed under severe hyperinflation.

Having satisfied sovereign considerations, however, the final document that outlines the LTP seems to go much further than a simple currency swap. After acid comments on "uneven economic development" and "adjustments" of policies of world powers in the region, the LTP notes that "The two countries shall promote the opening and development of the securities markets, support the multi-currency direct Financing of Pakistan's central and local governments, enterprises and Financial institutions in China, strengthen the cooperation between stock exchanges of the two countries, and support the two countries' enterprises and Financial institutions in carrying out direct Financing for projects along the CPEC in each other's capital markets." Note here that only Pakistan’s central and local governments are to be financed with Chinese currency backed projects. Even while the LTP notes backwardness in Xinjiang, there is obviously no question of any Pakistani currency being used for any project there, even if Pakistan has the capacity. The spread of institutions to be involved includes the stock exchanges, financial institutions, the central banks and almost everything else. This is not a simple banking exercise. It’s a near takeover.


Another paragraph outlines the various actions on the ground to implement the currency swap, which includes assigning of Chinese currency to banks to extend credit lines to fund CPEC projects, Cross Border Inter-Bank Payment systems, and several other actions, which logically should have been taken years ago. Clearly, earlier attempts to get the currency swap off the ground came to nought. In 2013, a State Bank invitation of bids for the sale of yuan came to nothing. The fresh announcement is therefore exactly what it is – a start afresh at a time when the CPEC import bill is getting unbearable. Pakistan’s trade deficit with China has tripled to almost $12 billion. Meanwhile, the State Bank pointed out that high imports of raw and capital goods had led to a serious current account deficit of $6.1 billion, with the third quarter figures the worst since 2009. The currency swap arrangement will certainly reduce the reliance on dollars and therefore give the economy a breather. However, this is hardly the critical question.

Currency swap practices are not of themselves a questionable exercise. Such arrangements promote bilateral investment and protect against currency shocks. Few will remember that it was the economic effect after 9/11 that led the US also to opt for temporary currency swap arrangements to avert a crisis. This was later revived and made permanent in the aftermath of the global financial crisis. Currency swaps arrangements by China are however prompted by a desire to internationalise the renminbi. The People’s Bank of China has 24 active currency agreements to the tune of RMB 2.71 trillion. For instance, it has one with the European Bank to a tune of 350 billion yuan. That’s hardly comparable to the 10 billion yuan in Pakistan. However, the difference is that Europe is a stable economic entity. Pakistan is not.


A second issue is the sheer size of the CPEC portfolio which the currency swap is aimed at promoting. This has grown—on paper at least—from $46 billion to at least $60 billion. The LTP document provides some insight into the range of projects, all of which constitute only one small part of the far larger Belt and Road Initiative. The document’s objective is stated baldly as "to form a new international logistics network and industrial layout" and "elevate the status of South Asian and Central Asian countries in labour division of the global economy". The envisaged labour division is also apparent since it Beijing’s stated objective to leverage its own technological and financial prowess. Earlier, in June, the influential Dawn had broken the story of the extent of the CPEC’s planned penetration into not just Pakistani businesses, agriculture, defence and telecommunications, but also into society itself. The currency was the last bastion of the Pakistani state that remained inviolate. It seems that this is now about to be breached.

http://www.firstpost.com/world/paki...ency-swap-arrangement-with-china-4289933.html

sounds to me like the Chinese want to help out keep Pakistan a stable country,
in exchange for some cooperation when they ask for it.

it's not uncommon. and i think it's a good move.
just don't go taking money from just one benefactor (China), Pakistanis.
that's becoming slaves to them, eventually.
 

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