China to allow all trades to settle in yuan, encourages use as reserve currency

[jakeXT]

China aims to allow all exporters and importers to settle cross-border trades in the yuan by 2011, according to the Chinese central bank, reported Reuters.

Moreover, China will “respond to overseas demand for the yuan to be used as a reserve currency” and allow the yuan to flow back into China more easily.

This is all part of China’s plan for the internationalization of its currency, which may, in the decades to come, threaten the global ‘market share’ of other currencies like the US dollar.

Previously, China also announced that bilateral trades with Russia and Malaysia will begin to be conducted with the yuan and the ruble and ringgit, respectively.

Other moves on the part of China to internationalize its currency include allowing foreign companies to issue yuan-denominated bonds and relaxing rules for foreign financial institutions to access the yuan.

Read more: http://www.ibtimes.com/articles/117991/20110302/china-yuan-trade-reserve-currency.htm#ixzz1FZxBV2FC

[Newest Reality]

1. My petro-dollars are starting to sweat and shiver in my

wallet. Ooops.

What's a faith-based ticket user supposed to do? ;)

[amandabeech]

2. China will let its currency float in and out of the country, but not up and down in value

against the other floating currencies, not even the heavily manipulated yen.

We will end up with two financial systems, one flexible with the U.S., Canada, Australia and Western Europe and the other stricly controlled China.

The two cannot mix.

I don't know how long the Euro zone will hold onto its less prosperous parts, and I'm not sure that Mexico will stay with the U.S. and Canada.

[vert1276]

3. They can TRY and do this all they want

But in the end no one will want to use a currency being pegged by its central bank. Just to much risk in it.