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rIs the day coming when the dollar loses its value as other currencies take its place in the world economy? What does it mean as China begins shifting away from the United States long- term securities to shorter-dated Treasury bills?
It came as no surprise to China watchers that it would begin the process of making its own currency, the renminbi, more convertible than other currencies. So when banks in China and Hong Kong began wiring the renminbi directly to each other, it was expected to happen eventually-- a sign of one more step being taken toward an international alternative to the dollar.
While it may be a few years away, the day that the renminbi is fully convertible is coming and could make a huge shift in the global economy with the consequence that the United States will no longer be able to run up huge debts as it is doing now.
It has been known for a long time that China wants to reduce it dependence on the U.S. dollar. In a country that plans far ahead, it could take years for it to accomplish its monetary goals. Right now, three-quarters of its $2 trillion in foreign reserves is held in the form of dollar-dominated assets. But as the financial crisis began in September 2008, China has begun make the shift away from long-term maturity bonds and securities from entities like Fannie Mae and toward short term government Treasury Bills.
To read entire article, go to:
http://www.nytimes.com/2009/07/07/business/global/07yuan.html?_r=1&8au=&emc=au&pagewanted=print
To learn more about the renminbi, go to:
http://mpra.ub.uni-muenchen.de/14112/
To read more about China's economy, go to:
To read more about China's plans for the future, go to
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