World News Thread & Breaking News!!

[SamuraiBlue]

The real question to ask here is not whether dollar would be replaced as a reserve. It's whether US dollar's reserve status would be supplemented with other currencies. Any international deals, settlements without the use of US dollar reduces it status as reserve.

Wrong question since the reason behind creating a reserve is to maintain reliability and stability of of your own currency since most all nation utilizes Fiat money system. Why?
To make transaction of natural resources on the global commodity market and to do that you need US dollar so you need to exchange your currency with US dollar on the international currency market. If your currency lacks reliability and stability then banks providing the US dollar will place a premium to ensure within a calculated risk they can gain profit.

For example NK wants to buy a certain item on the global commodity market. To do this they need to exchange their currency to US dollars. Do you think traders will accept this transaction without some reliability to their currency?

 

[delft]

BBC Radio 4 just said Costa Concordia is on her way to the breakers in Genua.

 

[texx1]

Wrong question since the reason behind creating a reserve is to maintain reliability and stability of of your own currency since most all nation utilizes Fiat money system. Why?

To make transaction of natural resources on the global commodity market and to do that you need US dollar so you need to exchange your currency with US dollar on the international currency market. If your currency lacks reliability and stability then banks providing the US dollar will place a premium to ensure within a calculated risk they can gain profit.

For example NK wants to buy a certain item on the global commodity market. To do this they need to exchange their currency to US dollars. Do you think traders will accept this transaction without some reliability to their currency?

US dollar is not the sole settlement currency for international trade, never mind the sole settlement currency for commodities. US dollar is the most frequently used. However, there are numerous commodity deals that are settled using other currencies. The recent natural gas deal between Russia and China is an example of commodity deals not using us dollar. Parts of the Venezuelan oil export to China is settled using RMB. China setting up RMB clearing hubs in London and Frankfurt is another step to settle some future bilateral deals with EU in RMB. Also nations can use currency swap agreements to settle deals in local currencies, thereby bypassing us dollars completely.

Using your example, NK can use Euro, RMB to settle global commodity deals as long as counter parties are willing to accept them. Bilateral trade between NK and China can be conducted with RMB to reduce FX risks as long as NK has RMB.

The point is us dollar is the current reserve currency in the world because most deals (including oil contracts) are settled in us dollars. However, countries like Russia, China are diversifying away from us dollars which is why there is a future possibility that us dollar won't remain the sole reserve currency. With the integration of BRCIS, there would probably be more deals settled using their respective local currencies, again bypassing us dollar.

 

[SamuraiBlue]

US dollar is not the sole settlement currency for international trade, never mind the sole settlement currency for commodities. US dollar is the most frequently used. However, there are numerous commodity deals that are settled using other currencies. The recent natural gas deal between Russia and China is an example of commodity deals not using us dollar. Parts of the Venezuelan oil export to China is settled using RMB. China setting up RMB clearing hubs in London and Frankfurt is another step to settle some future bilateral deals with EU in RMB. Also nations can use currency swap agreements to settle deals in local currencies, thereby bypassing us dollars completely.

Using your example, NK can use Euro, RMB to settle global commodity deals as long as counter parties are willing to accept them. Bilateral trade between NK and China can be conducted with RMB to reduce FX risks as long as NK has RMB.

The point is us dollar is the current reserve currency in the world because most deals (including oil contracts) are settled in us dollars. However, countries like Russia, China are diversifying away from us dollars which is why there is a future possibility that us dollar won't remain the sole reserve currency. With the integration of BRCIS, there would probably be more deals settled using their respective local currencies, again bypassing us dollar.

You do have valid point BUT unfortunately they are limited and isolated events. As I have pointed out at the moment there are no commodity or insurance market to make it a common practice.
Without it it is not going to change the present status quo.

 

[texx1]

You do have valid point BUT unfortunately they are limited and isolated events. As I have pointed out at the moment there are no commodity or insurance market to make it a common practice.
Without it it is not going to change the present status quo.

At the moment, they might seem isolated or limited. But we are talking about the future here. We cannot discount the impact of BRCIS would have on commodity market. Russia, South Africa, Brazil are large commodity exporting countries. Their choice of settlement currency even if just within BRCIS will have a noticeable impact on the world commodity market. China itself has ambition to internationalize RMB. And US is not doing its own reserve currency status any favors by slapping EU banks with fines for illegal activities that US banks themselves were involved. BRICS development bank never would have happened if BRCIS were giving more voting shares in the IMF.

 

[SamuraiBlue]

At the moment, they might seem isolated or limited. But we are talking about the future here. We cannot discount the impact of BRCIS would have on commodity market. Russia, South Africa, Brazil are large commodity exporting countries. Their choice of settlement currency even if just within BRCIS will have a noticeable impact on the world commodity market. China itself has ambition to internationalize RMB. And US is not doing its own reserve currency status any favors by slapping EU banks with fines for illegal activities that US banks themselves were involved. BRICS development bank never would have happened if BRCIS were giving more voting shares in the IMF.

I am afraid you are going ahead of yourself.

1. PRC is but a single voice among the other participating nations all having same voting power.
   
2. PRC doesn't have the natural resources that others have that they can put on the table.
   
3. Most natural resources beside oil is controlled by Western mining companies. Like Debeers, Rio Tinto, etc.

Like I said the hydrocarbon society today is not going to last another 20 years and it will start showing that it is losing grounds within five as we see hydrogen becoming a relevant energy source as fuel cell technology becomes more common.
When this happens both international banks are going to lose grip on fundamentals since no nation is going to have an edge in energy.

 

[bd popeye]

My condolences to the families of the victims of this tragedy.

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TAIPEI (Reuters) - A Transasia Airways plane crashed when making an emergency landing in Taiwan on Wednesday, killing 40 people, China's Xinhua news agency said.

Taiwan media said a domestic flight had crashed, killing or injuring more than 40 people. No more details were immediately available.

Xinhua said the accident happened in Penghu county.

(Reporting by Michael Gold; Writing by Nick Macfie; Editing by Clarence Fernandez)

 

[solarz]

My condolences to the families of the victims of this tragedy.

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Wow, this is a bad year for flying...

 

[texx1]

I am afraid you are going ahead of yourself.

1. PRC is but a single voice among the other participating nations all having same voting power.
   
2. PRC doesn't have the natural resources that others have that they can put on the table.
   
3. Most natural resources beside oil is controlled by Western mining companies. Like Debeers, Rio Tinto, etc.

Like I said the hydrocarbon society today is not going to last another 20 years and it will start showing that it is losing grounds within five as we see hydrogen becoming a relevant energy source as fuel cell technology becomes more common.
When this happens both international banks are going to lose grip on fundamentals since no nation is going to have an edge in energy.

Given the size of Chinese economy compared to rest of BRCIS, it's not hard to see China will try to take a leading role in the BRCIS. In transactions involving fully fungible products such as commodities, buyers have large bargaining power. China has enormous appetite for natural resources so if China wanted to settle parts of its commodities deals using RMB with Brazil, Russia, South Africa. Are they just going to refuse? The same logic can be applied to non-US western firms. If there's profit to be made, are they going to refuse good deals because parts of profit are in RMB not in us dollars. In other words, don't expect too much loyalty to us dollar from the rest of the world.

 

[Janiz]

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...had anyone seen something that could verify that news recently?