Skip to main content

Deutsche Bank: The Chinese Renminbi Will Be The World's Next Major Reserve Currency



According to a leading analyst the renminbi is expected to become a major reserve currency in the next decade, a move that could see the greenback's share of global reserve currencies fall from about 60% now, to 50% by 2020. 

Cloete notes that Berkeley economist Barry Eichengreen has said that the renminbi could account for 15% of global currency reserve holdings within ten years.
Cloete elaborates:
"Demand for RMB is bound to accelerate, given China's commitment to liberalize its capital and current account by the end of 2015.
Hardly a month goes by without the People's Bank of China further loosening the restrictions on onshore RMB trade settlements for foreign investors and customers. For instance, since August 2011 foreign businesses have been able to settle contracts in RMB in any province in China, a relaxation of the rules that would have been unimaginable even two years ago."

Chinese renminbi
Read more: http://www.businessinsider.com/deutsche-bank-the-renminibi-is-the-worlds-next-reserve-currency-2011-12


Chinese renminbi fast becoming the leading reserve currency  -Renminbi bloc 
According to Subramanian and Kessler, respectively a senior fellow and a research analyst of the Peterson Institute for International Economics (PIIE), the currencies of seven out of ten economies in the region are tracking the renminbi more closely than tracking the U.S. dollar. This seems evident, as China's manufacturing trade with East Asia has risen from a scanty 2% in 1991 to 22%. There are many reasons supporting the development of an RMB bloc. The renminbi's reserve currency posture has risen from 35th globally for transaction volumes in 2010 to 14th byAugust. The economies of Korea, Malaysia, Indonesia, Singapore and Thailand are already more tied to renminbi than dollars, signaling a growing trend in the region that favors the Chinese currency for cross-border trade.
A current white-paper by the SWIFT indicates that renminbi-denominated trade accounted for 10% of China's total foreign trade in July from close to zero just two years ago. 2012 is a milestone year for the RMB: it had a market share of 0.53 percent in August and has overtaken the Danish krone to become the 14th-highest global payment currency, SWIFT said. The Royal Bank of Scotland and HSBC are two banks quite bullish on the RMB. RBS predicts the RMB to become fully convertible by 2015. HSBC is a member of the 2012 London RMB initiative, set up by the City of London and has a US road show presentation to entice investors to pool funds into RMB bonds. HSBC also estimates the RMB to be fully convertible by the end of the decade.

Comments

Post a Comment

Popular posts from this blog

Best IELTS and English language training institutions in Hyderabad

IELTS stands for International English Language Testing System. As the name implies it is basically an English test for testing the proficiency of the language in an individual.  Training for IELTS can be taken to pass the IELTS exam or to develop good english language skills. I am giving the training institute addresses for Hyderabad. The test system is jointly managed by the British Council,IDP education ltd and University of Cambridge ESOL Examinations and more than 1 million candidates are taking the exam all over the world. The test has two versions : 1. Academic 2. General training Academic  version is for people who plan to continue their higher education by enrolling in universities in countries like US,UK,Australia,Canada,New Zealand etc.The academic institutions in these countries consider the IELTS score as a criteria for the admission process. General training is mostly for immigration purposes in countries like Australia,New Zealand,Canada etc. It may ...
9 comments
Read more

How to use home loans most effectively for tax benefits

1) Deduction on interest: If you are paying EMIs for a home loan you took to buy a house, the interest component in the EMI can be claimed as deduction. You must be both an owner and a co-borrower (in the loan) to claim tax benefits. This deduction can be claimed starting the year in which the construction of the house is completed. Suppose the construction of your house was completed on August 30, 2014, you can claim deduction for interest for the entire 12 months in financial year 2014-15. So every year a maximum of Rs. 2 lakh can be claimed for a house that you use for your own residence. If your house is rented, the entire interest for the year can be claimed as deduction. The interest payments for the year shall result in a loss under the head 'income from house property'. This loss can be adjusted against in the same year against other heads of income in your income tax return including salary. Therefore, it reduces your total taxable income and the tax you pay thereon. A...
2 comments
Read more

Intellectual battle against ISIS as important as Military: Sheikh Makhtoum of Dubai

The global financial crisis taught the world how profoundly interdependent our economies have become. In today's crisis of extremism, we must recognize that we are just as interdependent for our security, as is clear in the current struggle to defeat ISIS. Mohammed bin Rashid Al Maktoum, VP and prime minister of the UAE, ruler of Dubai If we are to prevent ISIS from teaching us this lesson the hard way, we must acknowledge that we cannot extinguish the fires of fanaticism by force alone. The world must unite behind a holistic drive to discredit the ideology that gives extremists their power, and to restore hope and dignity to those whom they would recruit. ISIS certainly can – and will – be defeated militarily by the international coalition that is now assembling and which the UAE is actively supporting. But military containment is only a partial solution. Lasting peace requires three other ingredients: winning the battle of ideas; upgrading weak governance; and ...
Post a Comment
Read more