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Continuing the dam metaphor: Why would they open the floodgates when they can release pressure more safely?
by xapata 6y ago
Continuing the dam metaphor: Why would they open the floodgates when they can release pressure more safely?
- bobthepanda 6y agoLong term we know that opening the Chinese market would probably be the most healthy thing for global commerce. The problem is that currency markets are ruthless, and past crises with other currencies shown that it is unclear what kind of opening can and cannot be clamped down on. Opening up something innocuous may end up inadvertently creating a large crack. And the Chinese market is so large that even a trickle in releasing Chinese capital controls can be a deluge in other smaller markets. On the one hand China is not shy about reestablishing capital controls if need be, on the other hand using that as a tool makes CNY undesirable as a reserve currency.