A mash note to the SDR

Slightly old news, but China will not shut up about wanting the CNY to be included in the SDR basket.

ATTENTION CHINA: JOINING THE SDR BASKET DOES NOT MAKE YOUR CURRENCY CREDIBLE; YOUR CURRENCY HAS TO BE CREDIBLE BEFORE IT CAN JOIN THE SDR BASKET. YOU ARE CONFUSING CAUSE AND EFFECT.

They’re trying to make it look less nakedly ambitious by saying that “currencies of major emerging economies, such as those of the BRICS [BRIC plus South Africa] countries”, should be added to the basket, rather than specifically talking about the CNY.

But if they tried to make the INR or ZAR into a reserve currency, those smaller countries and their smaller economies would end up with an even worse hot-money problem than Brazil or China – and what reserve manager in their right mind would want to use the barney ruble as a reserve currency?

This entry was posted in Money, Rant. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *