Wednesday, August 03, 2016

funny? or not funny?

1 comment:

Anonymous said...

August lift-off: China set for Special Drawing Rights bond issues, report says

But traders and economists question value of such bonds, saying technical problems must be solved

China might take another big step forward this month in its long-term aim to forge an IMF money system into the world’s dominant currency.

Mainland media group Caixin reported that the World Bank planned to issue bonds denominated in Special Drawing Rights in China as early as the end of this month. It said policy bank China Development Bank was also planning an SDR bond issue.

The SDR is a unit of money ­created by the International ­Monetary Fund and defined by a weighted average of various ­convertible currencies.

Market traders questioned the real purpose of such bonds, saying the SDR had little use in investment and trade.

China has long had an obsession with the IMF’s SDR and wants to reduce the global ­reliance on the US dollar.

The IMF agreed last November to add the yuan to its SDR basket of currencies and offered the weighting as the third-biggest in the group, which Beijing saw as a triumph in its push for the yuan to have greater global influence.

But the yuan later came under heavy depreciation pressure amid massive capital outflows – raising doubts about its credibility as a global currency.

Beijing then began to publish its foreign exchange reserves, overseas investment and payments denominated in SDR.