European bank’s move to rely on China
In a world where China has overtaken the United States as the world’s largest economy arguably, reverberations are being felt in many fields. In the latest move by the European Central Bank, it has exchanged some of its US dollar reserves for Chinese yuan for the first time in its history. For Europe this is a logical move, since China has become one of its major trading partners in recent years and with China’s continued growth in the East, more and more countries from around the world are sure to follow suit, given the country’s rising global economic importance. We have seen the US dollar as a currency that is usable in most countries around the world showing the power of the dollar. But now we see the same thing happening to the Chinese Renminbi where it is starting to be used in many countries. China’s economic power is reflected in the strength of their currency. Their rise to superpower status is more accepted by the world at large and by some grudgingly. Many 1st world and developing countries’ currency cannot still reach this status but China has far surpassed them.
Tsem Rinpoche
ECB swaps some dollar reserves for yuan for first time
Tuesday, June 13, 2017 | MYT 10:36 PM
FRANKFURT: The European Central Bank (ECB) said Tuesday it had exchanged part of its US dollar reserves for Chinese yuan for the first time, in a sign of the growing global importance of Beijing’s currency.
The ECB’s exchange of part of its US dollar reserves for yuan signals the growing global importance of Beijing’s currency (Reuters)
The Frankfurt institution “completed an investment equivalent to 500 million euros (RM2.4bil) of the ECB’s foreign reserves in Chinese renminbi (CNY) during the first half of 2017,” it said in a statement.
Justifying its decision, the ECB said that “the use of CNY as a global international currency has increased in recent years,” being declared a freely-usable currency by the IMF in 2015.
”The ECB’s investment also reflects the importance of China as one of the euro area’s largest trading partners,” it added.
Its purchase of the Chinese cash was paid for with “a small portion of its US dollar holdings, which remain the largest portfolio,” it added.
The ECB’s foreign reserves, held in US dollars, Japanese yen, Chinese renminbi, and International Monetary Fund Special Drawing Rights (SDRs), remained at the same overall size.
Figures released last month showed that the ECB’s official reserves stood at over 68 billion euros at the end of April, including 47.7 billion euros in foreign currencies and 18.8 billion euros in gold.
The ECB only publishes figures on its holdings of individual currencies in its annual report at the end of each year.
In December 2016, the central bank held US$46.8bil in US dollars (41.7 billion euros), and 1.1 trillion Japanese yen (8.8 billion euros). – AFP
Source: http://www.thestar.com.my/business/business-news/2017/06/13/ecb-swaps-some-dollar-reserves-for-yuan-for-first-time/
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Finally, the dragon has woken up full of energy and power. China used to be very powerful prior to the fall of Qing dynasty. Many Asia countries sought protection from China by making offerings to the emperor on a regular basis. There were a lot of trading activities between China, other parts of Asia, middle east and Europe.
Later, the European countries and America rose as the superpower and Asia has lost its influence in the international arena. For many years, Asia was ‘controlled’ by the west. However, things have changed now. Ever since China opened its door to the outside world, its economy has developed and grew so fast that it has become the most powerful country in the world.
China has made a lot of investment in emerging countries like in Africa, South America, to help them develop their economy and improve their standard of livings. What China provides is a win-win situation. This is a very favourable approach by most people, therefore more and more countries want to work with China. As the popularity and wealth of China accumulates, it is no surprise that Chinese Yuan will eventually replace US dollar to become the trading currency.
This move by the European Central Bank to exchange some of its US dollar reserves for Chinese yuan, for the first time in its history, is a firm move that reflects the growing respect and confidence of the Western countries in the economic stability and strength of China. This shows the great stride China has taken to move forward and even outpace many of the bigger economic powers of the world. So much for impermanence, when not so long ago, the scenario had very been different.
Once the new economic world order is established, there will be no hesitation on the part of other countries to switch to include the Chinese yuan as one of the currencies in their basket of currencies that constitute their foreign reserve. The Chinese yuan is fast growing in power indeed!
The new world order is emerging, China as one of the five permanent member of the UN, has now emerged as the leading economy in the world.
I do think the Chinese, are very wise not allow the rest of the world to manipulate its currency, and they are very strong in watching over their currency.
Anyhow congratulations that the Chinese, influence is pervading the world. The Chinese way of doing things is a hell lot better than Western colonization in my opinion, colonization usually resulted in people who resist dying, and resources from a less developed country surrendering their materials and resources. China is not perfect, but at least when they go outside of China, they engage much better than Western colonists with a lot less human loss and stress.
There is no forever allies or foes in the arena of politics and finance. The job of the leaders is to protect the interest of their own nation and people. Leaders of the developed and progressive nations are deeply aware of this fact. They will not hold on the old grudges or keep the hatred alive. Imagine what a foolish move it will be if China decides to hold on the humiliation by the Eight Nations Alliance and boycott this move from the ECB? It will be utterly foolish, isn’t it?
As leaders are designated to protect the interest of their people, therefore it is only logical for the ECB to swap the dollar reserves with China Yuen since it is more beneficial to do so than keeping the dollars. And China will welcome this move as it means an increase of strength in the Yuen.
I hope more leaders of the people (for example, the CTA) can do the same, i.e., do what is beneficial to the people instead of perverse old grudges.
Whatever China’s past or current policies are, it is evident that have made tremendous leaps forward in may areas, be it economics, political or religious. They may not be perfect but it cannot be aid that they have stayed mired in their old ideology. They are proving to be progressive which is more than most countries or people.
And, it takes a great organization or nation to recognize that and be impartial but recognize the effort and achievements of China and her people. This recognition by the European Central Bank is just the beginning of more things to come as China grows.
The news that China is now the largest economy in the World has ended America’s 142 years at the top. Experts have described the toppling of America after nearly 150 years by China is a “Symbolic” moment for the global economy. China, whose wealth has accelerated in the recent decades amid rapid industrialization is expected to extend its lead, with IMF’s estimation that its economy will be worth Pound sterling 16.7 trillion in 2019. As said in a statement, even the European Central Bank (ECB) had informed that Franfurt institution had completed an investment equivalent to 500 million Euros (RM2.4billion) of the ECB’s foreign reserves in Chinese Renminbi (CNY) during the first half of 2017. It is said that “the ECB’s exchange of its US Dollars reserves for Yuan, signals the growing global importance of Beijing’s currency.” In further justification of its decision, the ECB also said that “the use of CNY as a global international currency has increased in the recent years after its declaraction of being a freely usable currency by the IMF in 2015”. ECB’s investment also reflects the importance of China as one of the Euro area’s largest trading partners! Many thanks to Rinpoche for the kind sharing of such interesting vital information.
China is communist country but it can overtake US and become a world largest economy country in short periods. Spending power of china people very strong. Many countries also target on China tourists and want grab this golden opportunity to gain more income on tourism industry.
Malaysia tourism department should do more favor to China tourists to attract more foreign income. We should learn from strategy of China to improve our economy especially in this economy downturn to attract more foreign investment.
Thanks Rinpoche for sharing this article to help me gain extra knowledge.
Jason
“America First” is the winning slogan of the President of the USA. USA had diligently looked into different parts of the world to ensure democracy and human rights, since the end of WWII. Now USA has decided to look only to herself first, then someone else needs to ensure that the world will continue its growth for the betterment of mankind.
China has risen exponentially in her role in assisting many countries to expand on their economical growth and to continue her influence on the world order is a natural progress.
It is encouraging to note that EU has exchanged US dollars to hold the Chinese Yuan in their basket of currencies.
Let no one begrudge China her new role within the world order.
Thank you Rinpoche for sharing this article. China is growing very fast. Even the United States is behind them. As we can see here in Malaysia, many of the building constructions are from China companies. China is also helping Malaysia to build our East Coast Railway Line and also funding the construction. Eventually, China will conquer the world with their economy.
With folded palms,
Vivian
If the U.S. continues to shirk its role as global leader.A new axis of power, based on economic power, will form between Europe and China.Where China has overtaken the United States as the world’s largest economy.The U.S and Europe appear to be hurtling toward a messy breakup, there’s where China is ready to be the global leader.For the first time European Central Bank has exchanged part of its US dollar reserves for Chinese yuan. China and Europe are moving forward without Trump administration as U.S interests more on peace and prosperity.The European central Bank’s investment reflects the importance of China as one of the euro area’s largest trading partners so much as they rely on them.
Many European countries are starting to use the Chinese Renminbi rather then US dollar as a currency. This show the strength of chinese Renminbi.
Thank you Rinpoche for sharing these latest updates.