4 ms·
How is it even possible to enforce that?
by dgemm 10y ago
How is it even possible to enforce that?
- seanmcdirmid 10y agoCompanies generally follow the law on currencies. So a London bank won't take yuan because the Chinese government says it can't. Your black market traders will take it, but they might...screw you over since you can hardly call the police on them.
- dgemm 10y agoI guess I don't understand why a bank in London would choose to comply with Chinese law when there is obviously business to be had.
- vetinari 10y agoThey have usually a business in China too - and want to keep it. For the same reason BNP Paribas paid the record 9 bil USD fine to US, even though it is a French bank.
- 2AF3 10y agoChina exerts influence on Hollywood even though its not in their jurisdiction, they control access to the Chinese moviegoer.
- vetinari 10y agoThe amounts handled by black market are harmless, that is not going to be enforced (unless it is necessary to make example of someone). What the regulation does, is to protect against attack on the currency on the open market, like 1997 SE Asia one. Obviously Chinese are currently holding an opinion, that this protection is currently worth more than uncontrolled investment.
- DashRattlesnake 10y ago> Companies generally follow the law on currencies. So a London bank won't take yuan because the Chinese government says it can't. I doubt it's that simple. Does that Chinese currency law have any force in the UK? I'm by no means knowledgeable about this, but I'd imagine it's more like any bank that offers yuan accounts in the UK would necessarily need to be able to do business in China to make the accounts useful, subjecting it to Chinese law. Since the Chinese government forbids the latter, the former is loses its appeal. So a London bank could take yuan if it had no Chinese presence, but it wouldn't want to.
- seanmcdirmid 10y agoNo it doesn't, but a bank that took RMB would basically be cut off from most sources that could consume RMB, like the Chinese government or Chinese companies. So they would be stuck keeping pieces of paper in a vault somewhere, hardly a nice situation to be in.
- John23832 10y agoThe value of a currency eventually leads back to the government that issued it. When I spend a Dollar, the business that gets it puts it in a bank account. That Dollar can (theoretically) be taken to the issuing bank, in this case the Fed, by the business' bank, in order to get something of value. To enforce the trading of Yuan, the Chinese we do not value Yuan held by in foreign accounts (or in the case of the "international" Yuan, it's value is restricted). So now those pieces of paper you have with Chinese lettering (or that account valued in Yuan) has nobody that gives it value... it's worthless.
- fsloth 10y agoI would imagine that most money is in digital form even in china?
- B4CKlash 10y agoFrom a practical standpoint it means that all of the <Legal> currency translations are done inside of china. You wire 100MM USD to a Chinese bank, they preform a book transfer and deposit the equivalent into your RMB account. The bank plays a weird middleman in the transaction. Same thing happens in Brazil with the BRL (and a number of other countries).