The global financial crisis has exposed the old international monetary system defects. As China, Russia and other promotion, monetary reform in the world to be a compelling topic. And with the RMB Trade Settlements, China and some countries and regions enter into currency swap agreement, the RMB has been put on the international agenda.
the Chinese currency will become the backbone of international trade do?
at least in Asia, which seems to be a trend. Malaysian Prime Minister Najib Tun Razak said Malaysia would will follow the example of Brazil, the use of the RMB against the settlement of more trade with China. The symbolism of the event are pleased to make the Chinese government, and from a single dollar reserves, to diversify into great depth of meaning in many countries. But over- control of the renminbi relative to the yen as the currency for the free market, not a more suitable choice of regional trade. In view of recent U.S. large print money and the U.S. government budget deficit looming, the local currency for trade settlement for the first three, it is reasonable. China as Asia's main exporting countries, should be required to change a considerable part of the RMB-denominated trade with China, especially as its Asian neighbors, many companies, the company's business is centered in China. < br> There are many factors limit the value of the renminbi become a reserve currency. RMB by the strict control of the People's Bank of China, while China is still not free individuals to buy foreign currencies. RMB exists the potential risk of over-supply. China's reserve currency held outside may not choose a currency may be overvalued.
U.S. dollars, Europe, the euro, but the lack of a dominant currency in Asia. Despite the yen's 80 in the 20th century have played such a role, but in Japan The slow economic growth, low interest rates and the yen in China in the world growing importance of trade has kept the yen is not so attractive as a reserve asset.
Even so, the Japanese economy is still more than China powerful. While exports less than its neighbors, Japan, the value of goods may be exported overseas bigger, because many Chinese exports to other countries, low-cost production of assembled parts. If Japan's economic recovery, the yen interest rates, Yen importance in international trade will also increase.
pattern of global trade and reserves are likely to spawn a more balanced portfolio of foreign exchange. on Asia and China and other countries to trade frequently says the yuan will become a part of foreign exchange investment portfolio. But despite the growing role of the yuan, but almost no reason to expect that it will replace the status of the yen.
【Currently, the total amount of Japan's economy ranks second in the world after the United States, its 2008 GDP of 4.8 trillion dollars, the United States was 14.3 trillion. because of the continuing current account surplus, Japan has the world's largest net foreign exchange position , net foreign exchange position is part of foreign exchange assets over liabilities .2008 by the end of September, the Japanese foreign exchange assets reach 5 trillion U.S. dollars, foreign currency net assets of 3.1 trillion U.S. dollars. In contrast, although China's foreign exchange reserves have more However, net foreign exchange assets of less than Japan.
60 years in the 20th century, the yen-dollar exchange rate remained at 360 yen: $ 1, the Japanese economy at an average annual growth rate of 10%. to the 20th century, 70 years, the yen began to appreciate, while the global oil crisis occurred, leading to Japan's economic growth rate suddenly dropped to about 5%. However, more terrible things yet to come mm great stock market and real estate bubble, occurred in 1985, Plaza Accord by 1995 to reach $ 80: $ 1 peak, and then began to fall, to July 1998 dropped to 147 yen: $ 1. After the Japan-US joint intervention, the yen continued to depreciate and it did not.
Economics textbooks tell us that if a country's trade surplus continued, then its currency should appreciate. Interestingly, although the Japanese continued to maintain a current account surplus, the yen volatility is larger. In fact, Japan must export a large number of capital to maintain the yen exchange rate relatively stable, ensuring the competitiveness of Japanese products. 80 in the 20th century, the Japanese yen began to try to make international, so the yen as an international reserve currency, will be built for the Tokyo a global financial center. However, since Since 1992, Japan's economic growth rate not exceeding 2%, the economic downturn in 17 years the status of the yen declined, while foreign companies listed on Tokyo Stock Exchange reduced the number.
yen why they can not be international reserve currency? After all, the Japanese yen in other countries to actively promote the use, including a large number of low-interest loans to government assistance. Japanese banks established in the 20th century, 80 years a number of overseas branches, has released a lot of yen loans. Initially these measures are effective, the yen interest rates low, many countries borrow yen at first, but they soon discovered that the U.S. dollar against the yen exchange rate to face a lot of high volatility in exchange rate risk and to avoid exchange rate Risk is not a small cost, so by the yen has not very good for them.
Japan actively promoting the yen as a reserve currency, trying to Tokyo into an international financial center, which is Japan's national strategy . faced with an aging population trends, the Japanese want to export manufacturing from a single country, into a huge savings from the existing wealth in the long-term returns of the diversified country. if the yen as an international reserve currency, then the Bank of Japan can obtain seigniorage benefits, and that Tokyo as a global financial center, where many businesses will be in Tokyo for access to services income.
However, despite considerable wealth in Japan and a strong industrial advantages, and actively promote the process of internationalization of the yen, But the yen has not become a major reserve currency, it is hard to understand, it is worth our consideration. as an international reserve currency mm requires three basic conditions for a stable currency, lower transaction costs and higher transparency. Unfortunately, at Element too much volatility, transaction costs lead to the yen, not low, though they have a higher market transparency, but the yen is just to satisfy a condition obviously can not become an international reserve currency.
yen rate of several factors of high volatility cause, in which the wrong policy is the most important factor. First of all, the Japanese yen as a major exporter, means that a large number of yen liquidity outside Japan. While Japanese investors to buy U.S. treasury bonds, to be 4% higher than the yen interest rate, but if the yen depreciated 4% a year, then the income or zero, and this kind of thing often happens.
20 century and 90 years, Thailand borrowed a lot of yen because the yen interest rate is low. However, as at Yuan revaluation, the actual payment of the debt is likely to increase, so by the Thai baht or U.S. dollars, compared with, by the yen can not get more benefits. However, if the borrower's income is the yen, so he borrowed the yen to a matter of course, because you can use future income to pay the debt of the yen, to avoid exchange rate fluctuations. On the other hand, the long-term appreciation trend of the yen, Japanese exporters like clearing exports in yen, U.S. dollar clearing imported goods. In this way, their income there is no exchange rate risk of the yen, dollar expenditures, the appreciation of the yen when the expenses can be reduced.
This is actually equivalent to the exchange rate to transfer risk to the borrower who increases the volatility of the yen. because appreciation of the yen began, the borrowers and investors sell dollars and buy yen, the dollar to avoid suffering losses, making the yen a substantial shock.
only when a country has a variety of financial and physical assets, and these assets have good mobility, can produce an attractive rate of return, then the country's currency to become a reserve currency. a huge asset bubble burst in Japan after the financial assets and a sharp decline in the real estate market, but also in the zero interest rate policy, Japan's bonds, stocks and bank deposits are very low rate of return, which led to yen assets attractive to international capital markets declined. yen of the total foreign exchange market increased from 20% in 1998, down to 2007 years of 13%. which the birth of the euro in 1999 has further weakened the yen's status as an international reserve currency.
So, how should learn from the Asian experience and lessons of Euro?
First, the euro is a European political the primary means of integration, rather than a tool of economic integration. The reason why the establishment of the European Union, because European countries European countries trying to end long-standing is the largest country in mainland Europe and the two former adversaries mm Germany and France, agreed to establish a long-term political alliance of peace and prosperity. And in Asia, there is no such a basic consensus and mutual understanding.
second The euro is actually a lot of money of the Commonwealth. It replaced the German mark, franc, Italian lira, peso and other currencies, that is, it is built on the basis of these currencies, and to become the leading international reserve currency . In fact, the euro and between the Member States within the fixed rate system and the external is a floating rate system, such as the U.S. dollar against the euro is a floating exchange rate.
Third, economies of scale in Europe. the stable European market capacity up to 18 trillion dollars, but compared to other countries, the European current account deficit remained at a very low level, the net international balance sheet of the GDP, the deficit accounted for only 10%.
the order of European integration is First, political integration, and real economic integration and, finally, financial integration and common currency. However, financial integration in Europe was not complete, because for reasons of national security, they will protect a high degree of nationalization of the banking system. However, neither political integration in Asia, there is no financial integration, regional integration is the only trade integration.
All in all, despite the Anglo - Saxon countries, doubts and criticisms, the EU integration is a success, and the euro become the world's reserve currency the dollar a strong competitor. However, the euro's weakness is the EU not have their own military forces, because the EU is not a military alliance. a keen market observer will notice that if European countries and neighboring countries become strained military relations , for example, military conflict in the Balkans, then the status of the euro will weaken against the dollar. And when people talk about U.S. military operations impact on the dollar, generally refers to the United States in a particular region or country's military conflicts, will not pose a threat to the United States.
Therefore, when we discuss the role of reserve currency, we can not just be limited to monetary or financial issues, and to see all aspects of the global, including political, military, economic and other aspects.
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