FX Macroeconomics
authoritarian governments. Te type of political regime is a poor predictor of the ability to sustain growth.
RENMINBI TRANSACTIONS
Both the forces of movement and order are celebrating the recent news from SWIFT, that the Renminbi has surpassed the Euro in global trade finance in November 2013, with an 8.66% share of letters of credit and collection (euro share 6.64%). Te US dollar share is 84.96%. At the start of 2012, the RMB’s share was a little less than 2%. An estimated 20% of China’s trade is now invoiced in RMB compared with 1 % four years ago. Some industry forecasts suggest
it can
reach 33% in the coming couple of years.
SWIFT said the RMB was the 12th most used currency for transactions in October 20123 on its global payments system. Its growth rate of 1.5% on the month was less than the 4.6% overall growth. Tis means that the RMB’s market share slipped to 0.84% from 0.86%. According to BIS figures, daily RMB turnover averaged $120
60 FX TRADER MAGAZINE January - March 2014
bln in April and nearly 4-fold increase since 2010 and places in into the ninth position overall.
Te Deputy Governor of the PBOC said on November 20 that it is no longer in the national interest to continue accumulating foreign exchange reserves, which stood at a little above $3.6 trillion at the end of Q3 2103. However, this
value as higher than prevailing prices, China banned its banks from trading the digital currency. Baidu, China’s biggest internet portal reversed itself and indicated it would no longer facilitate the use of bitcoins. Tis announcement is perfectly consistent with the reformist agenda. Tere are no Bitcoin instruments, like notes or bonds. Te Bitcoin is not backed by gold, silver or commodities. Te
apparent
anonymity lends itself to money laundering and illegal capital movement.
Just
as the forces of movement embrace greater capital market liberalization, they have to vigorously clamp down on extra-legal forms.
China banned its banks from trading Bitcoin digital currency
was not a policy indication as China appears to be still accumulating reserves. Moreover, while some pundits read this as a blow to the US, this has been the US Treasury position for a long time.
BITCOIN BAN
Just as some a couple of bank analysts suggested that central bank may use the bitcoin for reserves and that fair
Te message was driven home by the fact that the decision to ban banks from trading Bitcoins was made
jointly by five different government entities, including the PBOC, the Ministry of Industry and Information Technology, the China Banking Regulatory Commission, China Securities Regulatory Commission and China Insurance Regulatory Commission. Going forward virtual currency trading platforms will have to register with telecommunication authorities.
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