http://globaleconomicanalysis.blogspot.com/2011/04/zhou-pledges-more-tightening-moodys.html
In spite of all the hype everywhere about the Yuan as a reserve currency, the idea is complete nonsense given issues regarding convertibility, property rights, civil rights, and the nature of China's command economy in general.
Moreover, given China's massive property bubble and unwarranted infrastructure build-out, the Chinese banking system is as bad a shape if not worse than other major countries. It is not even clear the Yuan is undervalued.
Paulson has this correct.
SDRs are nothing but hype as well. No one trades in SDRs. Moreover, any country that wants to keep reserves in a basket of currencies is free to do so now. Baskets of currencies will not fix any structural problems anywhere.
Thus, all these little arrangements where China trades in the Yuan with its neighbors are essentially irrelevant.
In spite of all the hype everywhere about the Yuan as a reserve currency, the idea is complete nonsense given issues regarding convertibility, property rights, civil rights, and the nature of China's command economy in general.
Moreover, given China's massive property bubble and unwarranted infrastructure build-out, the Chinese banking system is as bad a shape if not worse than other major countries. It is not even clear the Yuan is undervalued.
Paulson has this correct.
SDRs are nothing but hype as well. No one trades in SDRs. Moreover, any country that wants to keep reserves in a basket of currencies is free to do so now. Baskets of currencies will not fix any structural problems anywhere.
Thus, all these little arrangements where China trades in the Yuan with its neighbors are essentially irrelevant.
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