4 ms·

I don't want Kasey junk bucks. Which is why I'm scratching my head at youre reasoning the largest economy in the world would accept worthless currency.

kasey_junk 4y ago
And if I held a gun to your head and demanded that you accept kasey_junk bucks? China has some of the strictest currency controls in the world. To the point if you are doing treasury operations for an international business there you can’t use your normal financial rails to accomplish day to day tasks like manage payroll. No one, including Chinese citizens, want to keep their cash there. For corporations this manifests in added costs, but for individuals (with even moderate means) it becomes a game of hide the assets. So much so that cities in the west are dealing with asset inflation specifically attached to Chinese buyers. China doesn’t have a problem with western citizens over paying for property there. Until a currency liberalizes it can’t become a reserve currency for international trade. So for the yuan we have 2 choices, it liberalizes (and perhaps tanks their leadership) or it stays second class. The current Chinese leadership believes the former is worse than the latter.
- georgeplusplus 4y ago
  And if I held a gun to your head and demanded that you accept kasey_junk bucks? I don't believe that's whats happening though. The idea that Russia is holding a gun to china's head just doesn't make sense. Russia and China are part of the BRICS economic treaty, and this treaties main purpose is to see the dollar dethroned. I live in China FWIW and I don't see any of what you describe
  - kasey_junk 4y ago
    Sorry, we’ve been talking past each other apparently. I believe China is strong arming Russia into using the yuan when Russia would prefer anything else. My belief is that this is a sign of how weak the Russian economy is, not a sign of yuan strength. I 100% believe that the BRICS signatories want to see the dollar dethroned. I’m not even stating an opinion on whether it should be or not. My position is simple, illiberal currencies are not a viable alternative for international trade. A prerequisite for the yuan taking over as reserve currency is it becoming more liberal. That’s not currently the trend. And fwiw I’ve been both a fx trader and worked in treasury operations for an international. I’ve dealt specifically with moving yuan.
    - ShivShankaran 4y ago
      You are right about yuan and it's also the reason why USD is hard to dethrone. Russia even made it amply clear that it won't use yuan for the reasons you mentioned. A proposal was to use basket of currency or a new currency backed by precious metals. Pretty sure one of the above will happen over the next few years
      - kasey_junk 4y ago
        The US is one of the largest global holders of precious metals. You could perhaps replace it with a rare earth basket but that is effectively the yuan…
  - SergeAx 4y ago
    > The idea that Russia is holding a gun to China's head just doesn't make sense. You are absolutely right, because it is the other way around. China doesn't want to have problem with US and EU for dealing with Russia in USD or EUR, so it demands Russia to trade in yuans. Russia is therefore forced to sell its' oil and gas for yuans for the price set by China. The only leverage out of that situation is to trade with India and Turkey in rupees and liras, but India and Turkey can't offer lots of goods only China can.

kasey_junk 4y ago

And if I held a gun to your head and demanded that you accept kasey_junk bucks? China has some of the strictest currency controls in the world. To the point if you are doing treasury operations for an international business there you can’t use your normal financial rails to accomplish day to day tasks like manage payroll. No one, including Chinese citizens, want to keep their cash there. For corporations this manifests in added costs, but for individuals (with even moderate means) it becomes a game of hide the assets. So much so that cities in the west are dealing with asset inflation specifically attached to Chinese buyers. China doesn’t have a problem with western citizens over paying for property there. Until a currency liberalizes it can’t become a reserve currency for international trade. So for the yuan we have 2 choices, it liberalizes (and perhaps tanks their leadership) or it stays second class. The current Chinese leadership believes the former is worse than the latter.

georgeplusplus 4y ago
And if I held a gun to your head and demanded that you accept kasey_junk bucks? I don't believe that's whats happening though. The idea that Russia is holding a gun to china's head just doesn't make sense. Russia and China are part of the BRICS economic treaty, and this treaties main purpose is to see the dollar dethroned. I live in China FWIW and I don't see any of what you describe
- kasey_junk 4y ago
  Sorry, we’ve been talking past each other apparently. I believe China is strong arming Russia into using the yuan when Russia would prefer anything else. My belief is that this is a sign of how weak the Russian economy is, not a sign of yuan strength. I 100% believe that the BRICS signatories want to see the dollar dethroned. I’m not even stating an opinion on whether it should be or not. My position is simple, illiberal currencies are not a viable alternative for international trade. A prerequisite for the yuan taking over as reserve currency is it becoming more liberal. That’s not currently the trend. And fwiw I’ve been both a fx trader and worked in treasury operations for an international. I’ve dealt specifically with moving yuan.
  - ShivShankaran 4y ago
    You are right about yuan and it's also the reason why USD is hard to dethrone. Russia even made it amply clear that it won't use yuan for the reasons you mentioned. A proposal was to use basket of currency or a new currency backed by precious metals. Pretty sure one of the above will happen over the next few years
    - kasey_junk 4y ago
      The US is one of the largest global holders of precious metals. You could perhaps replace it with a rare earth basket but that is effectively the yuan…
- SergeAx 4y ago
  > The idea that Russia is holding a gun to China's head just doesn't make sense. You are absolutely right, because it is the other way around. China doesn't want to have problem with US and EU for dealing with Russia in USD or EUR, so it demands Russia to trade in yuans. Russia is therefore forced to sell its' oil and gas for yuans for the price set by China. The only leverage out of that situation is to trade with India and Turkey in rupees and liras, but India and Turkey can't offer lots of goods only China can.