Hot talks on the 'Super Currency'

(bbs.chinadaily.com.cn)
Updated: 2009-03-27 15:36

From jordan_c_fan

Ren Min Bi (RMB) -- Super Currency For The Future & Issues On Foreign Exchange

China's Finance Minister warned today that relying on a single currency for international payment is very risky. Although he did not mention the instability of US Dollar (USD), he called for the world to consider alternate currency controlled by the International Monetary Fund as the world's standard currency. As a result of the current worldwide financial crisis, China is desperately promoting the Ren Min Bi (RMB) as the regional currency of choice instead of the US dollars. China is in effect praising its own currency and asking to world the world to use the R. M. B. more often.

Since the current currency exchange rate is extremely volatile, China's first approach is to stabilize its own currency exchange for across the border exchange for neighboring nations. We can foresee a three (3) steps approach in internationalize of the RMB:

(1) Currently limiting the use RMB to China's trading partners who belong to the ASEAN.

(2) The next step will be to extend to neighboring nations such as Russia, Japan, India, and Korea.

(3) Finally the RMB will be used globally for trade. Their hope is for the RMB to replace the US dollar to become the standard currency of the world.

The down side may be that many countries feel that the US dollar is a more convenient currency. China also have more than two (2) trillion dollars invested in US currency or US Treasury Bonds. In case of trouble and devaluation of the US dollar, China will also be affected financially. This is the reason why China is using a more gradual approach to internationalizing the RMB.

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