...but don't play taps for the USD just yet.
First of all, the CCB doesn't speak for China in any official capacity (like the PBC does), and secondly Shuqing's intent in these remarks is to strengthen the Yuan's global authority, rather than hedge against US' looming inflation risk. Of course Xiaochuan and Medvedev are arguing precisely this point - the fundamental weakness and instability of America's currency due to the country's tremendous leverage. That is why they want another currency, or most likely a basket like SDR, to replace the USD. All signs point to this eventually happening, but the Dollar's demise will be a painful, political, and most importantly lengthy process (of course no political process is ever efficient, so that's a moot point).
That being said,the USD is going to keep depreciating, with a few bounces in between, as America has little alternative to printing more greenbacks. Well you know, aside from fiscal responsibility anchoring free-market capitalism.
First of all, the CCB doesn't speak for China in any official capacity (like the PBC does), and secondly Shuqing's intent in these remarks is to strengthen the Yuan's global authority, rather than hedge against US' looming inflation risk. Of course Xiaochuan and Medvedev are arguing precisely this point - the fundamental weakness and instability of America's currency due to the country's tremendous leverage. That is why they want another currency, or most likely a basket like SDR, to replace the USD. All signs point to this eventually happening, but the Dollar's demise will be a painful, political, and most importantly lengthy process (of course no political process is ever efficient, so that's a moot point).
That being said,the USD is going to keep depreciating, with a few bounces in between, as America has little alternative to printing more greenbacks. Well you know, aside from fiscal responsibility anchoring free-market capitalism.
Guo Shuqing, the chairman of state-controlled China Construction Bank (CCB), Mr Guo said the issuing of yuan bonds in Hong Kong and Shanghai would help to develop the debt markets in China and promote the yuan as a major international currency. Two months ago, before the G20 meeting in London, Zhou Xiaochuan, the head of the People's Bank of China, the central bank, published a personal paper proposing to replace the dollar as the international reserve currency. His call came after Wen Jiabao, the Chinese premier, asked the US to guarantee the safety of China's huge pile of US debt. |
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