3 ms·
The Chinese cannot lead with a RMB system which maintains the capital controls which they currently enforce. For an RMB system to take hold it needs to be freel
by onepointsixC 6y ago
The Chinese cannot lead with a RMB system which maintains the capital controls which they currently enforce. For an RMB system to take hold it needs to be freely exchangeable, and that would lead to trillions in additional capital flight from China. A complete non starter for the CCP.
The fact is that the dollar is king. Even the BRI, which many describe as China's master plan to influence the world, are denoted in Dollars.
- president 6y agoCorrect, this is why it is reported that China and other nations like Iran are trying to create an alternative currency to sidestep dollar restrictions.
- bassman9000 6y agoAnd they won't succeed, because currency is about trust, and dictatorships can't generate any of it long term.
- onepointsixC 6y agoAnd that won't much more useful to them than the RMB. The Saudi's, whom supply a significant percentage of China's oil, don't want RMB nor some new currency which has the Iranians involved. The Saudi's don't buy as much from China as China buys from them. So they don't want to be stuck with billions of a currency they can't use for anything. But dollars? They can use to that to buy whatever they want from whomever they want. That's because USD is used one one side 88% of all FX trades[1]. If you were going to buy something from another country you already were going to use dollars. [1]: https://stats.bis.org/statx/srs/table/d11.3 https://stats.bis.org/statx/srs/table/d11.3