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SOVEREIGN MAN

Signs point towards a new global currency

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With the extension of operation twist and and the inevitable QE3, continued volatility and devaluation of the USD is the in the near future. This uncertainty has caused other countries to seek other options for international trade than the reserve currency. Hong Kong recently announced the possibilities of de-pegging from the USD and now China is making deals to turn the Yuan into an internationally used currency. BBC reports:

China and Brazil have agreed a currency swap deal in a bid to safeguard against any global financial crisis and strengthen their trade ties.

It will allow their respective central banks to exchange local currencies worth up to 60bn reais or 190bn yuan ($30bn; £19bn).

The agreement is the latest in a series of similar deals signed by China with its trading partners.

In March this year, it signed a swap deal with Australia worth up to A$30bn ($31bn; £20bn) to promote bi-lateral trade and investment.

It has also inked currency pacts with Hong Kong and Japan.

Analysts said that Beijing has been trying to push for trade to be settled in yuan, rather than in US dollars, as part of its plans to seek a more global role for its currency.

“The motivation is to be less reliant on the US dollar,” Sean Callow, chief currency strategist at Westpac, told the BBC.

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Comments on this entry are closed.

  • GamerFromJump

    There will almost certainly be a currency that replaces the dollar, but I highly doubt that the RMB is it; not with all the manipulation and control it undergoes.

  • 1voluntaryist

    All China has to do to be the new reserve currency, boast trade and capital flow is to return to the gold standard. It would benefit the world also. But they are not Austrian economists. Perhaps this move will come from a more enlightened nation, Switzerland? We can hope.

  • NickNicolaou

    Yes this is a great way for people to wake up to start to buy gold and silver before if it is to late to do so. China has been purchasing massive amounts of gold in the tons a sign of things to come…

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