The yuan is displacing the dollar as a key currency

[Crypto]

I guess you missed the news.

Financial Times - China unlocks the right kind of growth



Consumption is now the main engine of China's economic growth, followed by Investment.

"Net exports" contribute ZERO to Chinese growth. In fact, net exports are now more likely to be a drag on China's economic growth. As the chart below clearly shows:

Pedalling prosperity | The Economist

Thanks CD, i did miss the news

 

[Solomon2]

There are two reasons why the dollar became dominant over its mid-20th century competitors, the pound sterling and the Swiss franc. One, people wanted to buy a lot of stuff from the U.S. and knew they would have to pay dollars for that. Two, countries, companies, and individuals accumulated a lot of dollar-denominated debts so these entities wanted not just to transact trade in dollars but to continuously accumulate dollars.

China has met the first condition, but not the second. Until China issues a lot of renminbi-denominated debt to foreigners the renminbi won't replace the dollar. The Euro has stumbled on much the same issue.

 

[Ticker]

There are two reasons why the dollar became dominant over its mid-20th century competitors, the pound sterling and the Swiss franc. One, people wanted to buy a lot of stuff from the U.S. and knew they would have to pay dollars for that. Two, countries, companies, and individuals accumulated a lot of dollar-denominated debts so these entities wanted not just to transact trade in dollars but to continuously accumulate dollars.

China has met the first condition, but not the second. Until China issues a lot of renminbi-denominated debt to foreigners the renminbi won't replace the dollar. The Euro has stumbled on much the same issue.

In the 60s, US economy was in doldrums and the Americans went to the Saudis and requested them to declare dollar as the oil transaction currency. The Saudis being the strongest OPEC members agreed in return for certain guarantees. Everybody needed oil and all of a sudden oil was being sold in dollars. Everybody rushed to buy dollars to buy oil. The Americans lifted the collateral linked to American Dollar and took certain other measures to enhance the process. Gradually, dollar became the world currency. American started printing paper and the world went agog buying it.

Saddam Hussain was the first one to declare Euro as the alternative exchange currency for its food for oil programme being operated under the UN auspices. Many countries converted part of their currency to Euro as their forex reserves. Unfortunately for the EU and fortunately for the Americans, the Euro fell from grace.

And now it is the rise of Chinese currency. If China can handle it properly, the days of dollar domination are nearing an end. And when that starts happening the American hold on geo-economy would start to lose its luster and with that a gradual waning of US geopolitical clout as well.

The Americans still print paper but the world is now gradually awakening to the rise of China.

These are some of the numerous reasons of dollar domination – all explained in just one view.

 

[Azazel]

In the 60s, US economy was in doldrums and the Americans went to the Saudis and requested them to declare dollar as the oil transaction currency. The Saudis being the strongest OPEC members agreed in return for certain guarantees. Everybody needed oil and all of a sudden oil was being sold in dollars. Everybody rushed to buy dollars to buy oil. The Americans lifted the collateral linked to American Dollar and took certain other measures to enhance the process. Gradually, dollar became the world currency. American started printing paper and the world went agog buying it.

Saddam Hussain was the first one to declare Euro as the alternative exchange currency for its food for oil programme being operated under the UN auspices. Many countries converted part of their currency to Euro as their forex reserves. Unfortunately for the EU and fortunately for the Americans, the Euro fell from grace.

And now it is the rise of Chinese currency. If China can handle it properly, the days of dollar domination are nearing an end. And when that starts happening the American hold on geo-economy would start to lose its luster and with that a gradual waning of US geopolitical clout as well.

The Americans still print paper but the world is now gradually awakening to the rise of China.

These are some of the numerous reasons of dollar domination – all explained in just one view.

Dollar became the world currency towards end of great depression itself.The United States has been the world's largest national economy ever since at least the 1920s.The allied victory of WWII and decline of British Empire led to the world domination of US.Its the Industrial might of US that made the dollar the world reserve currency not the Saudis.At that time most of the ME oil flowed to US so it was natural for them to adopt US dollar as the trading currency.In fact they didn't had any other option until the emergence of Euro.

 

[R0H1T]

I guess you missed the news.

Financial Times - China unlocks the right kind of growth



Consumption is now the main engine of China's economic growth, followed by Investment.

"Net exports" contribute ZERO to Chinese growth. In fact, net exports are now more likely to be a drag on China's economic growth. As the chart below clearly shows:

Pedalling prosperity | The Economist

So you're saying ~10% or so annual export growth is a drag on CN GDP ? Must say great logic there

 

[Ticker]

Dollar became the world currency towards end of great depression itself.The United States has been the world's largest national economy ever since at least the 1920s.The allied victory of WWII and decline of British Empire led to the world domination of US.Its the Industrial might of US that made the dollar the world reserve currency not the Saudis.At that time most of the ME oil flowed to US so it was natural for them to adopt US dollar as the trading currency.In fact they didn't had any other option until the emergence of Euro.

Sir, many renounced economists however, say what I have narrated above.

 

[R0H1T]

Sir, many renounced economists however, say what I have narrated above.

That doesn't make their "opinion" a fact does it ? By the end of WW2 US was the single largest lender in the world plus the biggest economy making $ the defacto reserve currency !

 

[Ticker]

That doesn't make their "opinion" a fact does it ? By the end of WW2 US was the single largest lender in the world plus the biggest economy making $ the defacto reserve currency !

And I was talking about the 1960s - dig the difference between WWII and 1960s.

What a moron.

 

[Chinese-Dragon]

So you're saying ~10% or so annual export growth is a drag on CN GDP ? Must say great logic there

Apparently you don't know the difference between exports and net exports.

You'll realize the answer when you think about it for 5 seconds.

After that, take a look at the chart in the Economist again.

 

[Azazel]

Sir, many renounced economists however, say what I have narrated above.

What you said is truth but not the whole truth.Before the WWII the world reference currency was Pound Sterling. After World War II the international financial system was governed by a formal agreement, the Bretton Woods System.

Under this system the United States dollar was placed deliberately as the anchor of the system, with the US government guaranteeing other central banks that they could sell their US dollar reserves at a fixed rate for gold.US dollar became a global reserve currency under this agreement.This happened because of the massive industrail prowess of US.Saudis and other ME countries had no role in it.They didn't had any other choice because no one will buy oil using any other currency.But 60's agreement with Saudis did helped dollar maitaining reserve currency status.

BTW,it not renounced,its renowned.

 

[R0H1T]

And I was talking about the 1960s - dig the difference between WWII and 1960s.

What a moron.

Apparently you need to learn a bit of history & lot more economics to call me that with your level of intelligence ! The UK, the largest economy in the world till WW2, was financed by the Americans in their fight against Germany & after the end of WW2 when most of their colonies gained independence the US became probably the largest economy atm not to mention the British had to pay an astronomical amount of US debt in $

The main reason why the $ became a reserve currency is because of the size of the US economy & the decline of the UK not because someone from West Asia agreed to trade oil for $

 

[R0H1T]

Apparently you don't know the difference between exports and net exports.

You'll realize the answer when you think about it for 5 seconds.

After that, take a look at the chart in the Economist again.

So where does all the investment end up ?

The record trade surplus over the years(excluding some of the last few since 2007-08) have grown at near double digit rates so unless I missed something here exports should still contribute greatly to your GDP overall & really I can't see how it isn't so presently

 

[Hasbara Buster]

That doesn't make their "opinion" a fact does it ? By the end of WW2 US was the single largest lender in the world plus the biggest economy making $ the defacto reserve currency !

Your opinion is also just an opinion.

 

[Solomon2]

I forgot to mention that by the 1960s the accumulation of dollars in foreign banks led spurred these banks to put these deposits to work by making dollar-denominated loans - what was commonly referred to as the "Eurodollar" market. With this innovation, foreigners lending dollars to other foreigners without any American involvement in the transaction, the dollar truly became the dominant international currency.

 

[kawaraj]

Dollar became the world currency towards end of great depression itself.The United States has been the world's largest national economy ever since at least the 1920s.The allied victory of WWII and decline of British Empire led to the world domination of US.Its the Industrial might of US that made the dollar the world reserve currency not the Saudis.At that time most of the ME oil flowed to US so it was natural for them to adopt US dollar as the trading currency.In fact they didn't had any other option until the emergence of Euro.

You missed two part of the story, which essentially makes you argument correct yet less reasoning in the debated case of China.

It's not the largest economy that naturally stand the US dollar as the dominant currency in the world, the missed part is as the largest economy the US provide commodities(processed) to the world thus other countries need to buy them in US dollars. This applies to your second part which says it's the industrial might that make that possible.

China as of today is the largest manufacturer with greatest industrial output as well as the largest exporter. This is exactly the reason the Redback is coming to the center stage.

There are certainly other factors but these fundamentals are the essential part.