Wednesday, June 13, 2012

Internationalization of the Renminbi

Speaking of collateral damage, an interesting discussion of the gradual replacement of the dollar by the renminbi has come to my attention from, of all places, Australia. The author sees savings accounts denominated in dollars as "collateral damage" when the dollar is displaced by the renminbi.

When should you begin to stuff renminbi under your mattress? Now. When will you be glad that you did? The author thinks it could come as soon as 36 months. Maybe not says China central banker, but let the market decide.

I have been monitoring this situation since I wrote about the bilateral swap agreements and plan to continue to do so. See also my April post on related matter between the renminbi and the yen. Certainly China-Japan bilateral trade represents a significant part of global trade and the significance of settlement that by-passes the dollar has been published  by several sources recently.

See this twit for a recent comprehensive explanation of the benefits of swap agreements: The BRIC Currency Swap Proposal Is A Global Game Changer

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