A 2017-end post with this title might be thought to focus on bitcoin, and I will indeed have something to say about that, but in my view the bitcoin bubble is mostly a symptom of deeper trends that need to be uncovered first. Today money is global, so we can start pulling the string anywhere and eventually get the full
Read more“Governments propose, markets dispose,” as Charles Kindleberger liked to say. Starting next year the RMB will be included in the official SDR basket, and that inclusion will have some immediate automatic consequences for official government reserve holdings, but that’s all. History tells us that you don’t get to be a world reserve currency just because a group of finance ministers
Read moreOn 13 September the BIS released its latest Quarterly Review placing emerging market vulnerabilities at centre stage. On 17 September, the FOMC voted against raising its target policy rate, citing near-term headwinds for the US coming from abroad. “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in
Read moreIt’s hard to short China, but not so hard to short China’s currency, and that’s a problem for the central bank. We’ve all heard about PBOC intervention in the spot exchange market, where the central bank is selling some of its vast horde of USD Treasury securities and buying RMB (thus shrinking its own balance sheet, since RMB are its
Read moreA summary of the 3rd annual joint conference of the People’s Bank of China and the International Monetary Fund offers a snapshot of the state of debate. So-called “renminbi internationalization” has been official policy since 2009. By the end of this year, expect to see the launch of a new “China International Payments System” to facilitate use of RMB as a
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