YUAN - SDRS - GLOBAL CURRENCY TALK

REVELATION 13:16-18
16 And he(FALSE POPE) causeth all,(WORLD SOCIALISM) both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads:(CHIP IMPLANT)
17 And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.
18 Here is wisdom. Let him that hath understanding count the number of the beast: for it is the number of a man; and his number is Six hundred threescore and six.(6-6-6) A NUMBER SYSTEM

Laying BRICS for new edifice By Dan Steinbock (China Daily)
Updated: 2011-04-13 07:55

On April 14, President Hu Jintao will meet with Brazilian President Dilma Rousseff, Russian President Dmitry Medvedev, Indian Prime Minister Manmohan Singh and South African President Jacob Zuma. The third formal meeting of BRIC (Brazil, Russia, India, and China) includes South Africa for the first time. In the past, the advanced economies empowered the world economy. Today, large emerging economies drive global growth. In the emerging world, the future is a source of hope and optimism. In the advanced world, it is often a cause for ambivalence and resignation. In the long run, however, the rise of the large emerging economies is vital to global peace and prosperity. The concept of the BRIC was developed in the early 2000s by Jim O'Neill, then global economist of Goldman Sachs. At the time, these four economies were less than 15 percent of G6 (the United States, Japan, Germany, France, the United Kingdom and Italy) in US dollar terms. Yet projections indicated that by the early 2040s the BRIC economies could be larger than G6. Of course, nothing is inevitable in history. As a group, however, BRIC has emerged from the global credit crisis better than the major economies. As a result, the BRIC economies could become as big as G7 by the early 2030s.

In the early 2000s, Goldman Sachs projected that China's total GDP would catch up with the US' by 2042. After the past decade and the global financial crisis, however, the pace of transition has accelerated. Now it appears that China's GDP may match that of the US by the early 2020s.The global crisis and the debt burden of the advanced economies will tax their growth for years to come, whereas the BRIC economies may grow twice as fast. And these large emerging economies are followed by mini-BRICs, including Indonesia, the Philippines, Egypt, Turkey, Vietnam and Nigeria.A strong BRIC growth does not require economic miracles. But it does presume macroeconomic stability, relatively high investment rates and trade openness, increasing technological capabilities, growing emphasis on human capital, and political stability.Now Africa has a representative in the BRIC alignment. In the future, some North African and Middle Eastern countries, too, may join the BRIC league. In the postwar era, Egypt, led by Gamal Abdel Nasser, emerged as the leader of the Arab world. But the gains of globalization have largely bypassed Egypt and its 80 million people despite the great economic potential. In 1980, Egyptians on average were almost 65 percent more prosperous than Chinese. Last year, the Chinese were 15 percent more prosperous than the Egyptians, at purchasing power parity.One of the most remarkable aspects of the rise of the BRIC economies is the severed tie between total GDP and per capita GDP, that is, the economic power of nations and the average prosperity of their citizens. In the past, the two used to go hand in hand. In the future, that will no longer be the case.In the 19th century, Britain was the growth engine of the world, and Britons had a relatively high per capita GDP. In the postwar era, the US was the strongest nation, while Americans were the most prosperous people on average. As global growth will be driven by the BRIC economies, the most powerful countries will no longer be the most prosperous.

As long as growth can be sustained in the advanced and emerging economies, all nations can benefit. That is the win-win story. But for that, we need a globalization that is more inclusive in kind.Economically, the epicenter of the global crisis was the financial sector in the West. In the future, it should pay for excessive risk taking. In the absence of appropriate financial sector reforms, the great global recession would only be a prelude to the next one. Strategically, the postwar multilateral institutions - as forums of global cooperation - must reflect on the proportionate role of the BRIC economies, especially in the United Nations, the World Bank and the International Monetary Fund (IMF).Since 2005, the advanced economies have urged China to become a responsible stakeholder in the international community. But if the multilateral institutions do not reflect the proportionate economic share and political voice of the large emerging economies, they can hardly be considered responsible.Under unchanged policies, the IMF says the net debt-to-GDP ratio of G7 would exceed 440 percent by 2050. Does that reflect responsible leadership? In the West, the rise of the BRIC economies is occasionally said to be a threat to market economy. Yet the reality is the opposite. A decade ago, about 80 percent of Americans saw the free market as the best economic system for the future. After the global financial crisis, this support has plummeted to 59 percent, according to GlobeScan. In China and Brazil, the corresponding support is 67 percent. In India, it's about the same as in the US.In the coming years, the economic rise of BRICS (BRIC + South Africa) will gradually translate into increasing political power, which will not minimize the value of other multilateral forums. It will only highlight the importance of new forums.Until recently, the world was led by the multilateralism of the few in the West. In the future, it will be led by more inclusive multilateralism of the many - in the West and the East both.The author is research director of International Business at the India, China and America Institute, an independent think tank in the US, and visiting fellow at Shanghai Institutes for International Studies.(China Daily 04/13/2011 page9)

New reserve system priority for G20 By Zheng Xinli (China Daily)
Updated: 2011-04-15 07:33

Establishing a multi-currency international reserve system and monitoring mechanism should be a priority for the G20.From the second half of 2008, a financial storm that originated in the United States swept across the world. The root cause of this crisis was the US' long-term abuse of sovereign credit, the misuse of its status as a global major reserve currency issuing country and the promotion of twin deficits in its current account and the fiscal budget. The situation was further aggravated by the maintenance of US citizens' excessive consumption and the US government's over spending.Any chance of preventing a financial crisis was lost when US credit rating agencies covered up the sovereign credit risk, reversed the risk relationship between debtor countries and creditor countries, and attracted international capital to high-risk regions.Now that the origins of the financial crisis have been identified, we should develop a strategy to prevent such a crisis from happening again, and build a more efficient and safer global financial system. This is a key responsibility for the governments of the world.The priority is to establish a multi-currency international monetary system, an international reserve currency monitoring and early warning system, and an international financial risk relief mechanism.

Establishing a multi-currency international reserve currency system is a fundamental way to maintain the stability of the international financial system. Such a global multi-currency reserve system could include the US dollar, the euro, yuan, yen, pound sterling and other currencies.There are competition, checks and balances, and intermediation among currencies. A multi-currency system would encourage international reserve currency issuing countries' governments to adopt a prudent monetary policy to keep their currencies stable and maintain their sovereign credit.

Only by establishing such an international reserve currency system, can the international financial system overcome its over-reliance on a single sovereign currency and avoid excessive exposure to the risks of one currency.With the collapse of the Bretton Woods System in the 1970s, international currencies decoupled from gold. The US dollar, which was based on the US' sovereign credit, became the major reserve currency. This allowed the US to transfer debt to foreign countries through currency depreciation. From 1971 to 2010, the US dollar depreciated 97.2 percent against gold, causing huge losses to countries holding US dollars.Depreciation of the dollar slowly steals the wealth of owners with dollar-dominated assets, but the recent financial crisis made some dollar-denominated securities vanish instantly. It indicates that as the world's major reserve currency issuing country, the US' financial security is related to the vital interests of everyone. Therefore, an early warning and monitoring system for the supply and circulation of any major reserve currency is also essential.However, the creation of a more efficient and safer international financial system should be gradual, the position of the US dollar as the dominant international reserve currency is irreplaceable in the near future. Given the negative affects the implementation of the quantitative easing policy by the Federal Reserve Board had on the global economy and financial stability, we should study common approaches in order to maintain the fragile recovery of the world economy.With the increasingly close economic ties among countries, any financial problems for one country mean problems for others. In order to maintain international financial stability, all countries should unite and establish an international financial safety cooperation and risk relief mechanism. The Chiang Mai Initiative, which was created in the wake of the Asia financial crisis, is a good example of such a mechanism.In the short term the International Monetary Fund should expand the scale of its Special Drawing Rights (SDR), adjust the proportion of SDR for each country based on proportional changes in their economy and global trade, and include currencies of emerging economies in the SDR basket. If one country is hit by a financial crisis, the IMF could give timely and effective relief to prevent the crisis from spreading.

To facilitate the creation of a competitive international multi-currency reserve system a permanent G20 executive office should be created. This office should then be responsible for monitoring the system and where necessary restricting the large-scale flow of international capital aimed at short-term arbitrage.The large-scale short-term flow of international capital and its speculation are an important cause of international financial volatility. Each country should take united action to strengthen the restrictions on international hot money, such as regulations on the time limits of capital inflow and outflow, and the collection of capital gains tax, etc.Directing investment into the real economy and using the capital and technology of developed countries to realize the industrialization and urbanization of developing countries would not only ease global inflation pressures but also create employment in developed countries and promote common development in all countries. The executive office should be mandated to mediate the investment channels and attract excess liquid capital to the real economy. This should be done through the admission of qualified institutional investors and various funds, providing sound capital market functions, and expanding inter-government aid loans, in order to attract capital to nations and regions with high investment demands.It should also reconstruct the international credit rating system, strengthen the professional ethics for credit rating agencies, break the monopoly of a few agencies on international credit ratings, and promote the objectivity and fairness of credit ratings.The author is executive vice-president of the China Center for International Economic Exchanges.

IMF warning: Many European banks on shaky ground
Updated: 2011-04-14 09:14(Agencies)

BERLIN - The IMF singled out European banks as it insisted that more needs to be done to shore up the global financial system, saying Europe's weak banks are caught in a maelstrom and must beef up their financial buffers.The International Monetary Fund said Wednesday the weaker tier of Europe's banks are facing pressure on multiple fronts, from thin capital reserves - which help absorb losses in sudden downturns - and shaky investments still held on their balance sheets to unstable sources of financing.The warning comes as European Union officials struggle to shore up confidence in government finances and banks. Greece and Ireland have already needed bailout loans to avoid defaulting on their debts, and Portugal has also asked for help from the EU bailout fund.Incomplete policy actions and inadequate reforms of the banking sector have left segments of the global banking system vulnerable to further shocks, the IMF report said.Many institutions - particularly weaker European banks - are caught in a maelstrom of interlinked pressures that are intensifying risks for the system as a whole.The EU banking regulator is trying to boost confidence in the continent's banks by putting 90 of them - the bulk of Europe's banking system - through stress tests that measure what would happen to their finances if the economy took a sudden downturn. A similar exercise last year was deemed easy, and passed Irish banks that later failed.

The purpose of the tests is to push banks that flunk to ask investors to put up more capital and strengthen their finances, or else cut back risky loans and investment to levels that their capital buffer could handle. Results are expected in June.The IMF report outlined other problems facing the world's financial system, such as too much household debt in the United States, and emerging economies' problems in handling new inflows of investment without overheating.Policy makers globally have pushed banks to raise more capital and introduced new safeguards, the IMF said in its twice-yearly report on the stability of the global financial system, but said more needs to be done to guard against a new financial crisis.The Washington-based international organization especially underlined the interlocking financial problems afflicting the 17 nations that share the 12-year-old euro currency.Government and bank finances are closely related because European governments, especially Ireland, have incurred heavy expenses bailing out failed banks. In turn, questions about European governments' big deficits and ability to pay are undermining bank holdings of government bonds.Some banks - like Italy's Intesa Sanpaolo and Germany's Commerzbank - have already started strengthening their capital buffers ahead of the stress tests.But other banks - especially in Ireland and Greece - remain addicted to last-resort financing from the European Central Bank because they are unable to raise enough money by borrowing normally. The ECB has so far not come up with a comprehensive way of getting those banks off life support.

FEBRUARY 14, 2011, 4:51 A.M. ET.France's Lagarde In Favor Of Including Yuan In SDR - Report

PARIS (Dow Jones)--French Finance Minister Christine Lagarde is in favor of including the Chinese yuan in the basket of currencies that make up the International Monetary Fund's Special Drawing Rights, Financial Times reports Monday. Lagarde said she would be in favor of the inclusion of the yuan even before it is fully convertible, the newspaper said. Once convertibility is well-advanced, it [the inclusion in the SDR] could be with a commitment towards full convertibility over time, she was quoted as saying by the Financial Times. Lagarde also said France will push for finance ministers of the Group of 20 industrialized and developing nations to be given direct authority over strategic decisions made by the IMF regarding the international monetary system.As France chairs the G-20, Lagarde also said her government would push for a tax on financial transactions even if there is no support from the U.S., but enough support from other countries.France will hold a G-20 summit in Paris later this week. Newspaper Web site: http://www.ft.com
-By Paris Bureau, Dow Jones Newswires; 33-1-4017 1740; inti.landauro@dowjones.com

FACTBOX-EU position on key topics for G20 finmins in Washington
BRUSSELS, | Mon Apr 11, 2011 6:08pm IST

BRUSSELS, April 11 (Reuters) - European Union finance ministers and central bankers agreed last week on common positions on key topics for the April 14-15 meetings of finance leaders of the world's 20 biggest economies in Washington.EU delegations, which make up five of the 20 members of the G20, are to stick to the following positions, spelled out in a terms of reference document, obtained by Reuters.

ON DETECTING IMBALANCES THAT COULD LEAD TO CRISES

The G20 are to agree in Washington on indicative guidelines for how to use a set of economic indicators agreed in February to detect imbalances that could trigger a crisis.The agreed indicators are: public debt and fiscal deficits, private savings rate and private debt, external imbalance composed of the trade balance and net investment income flows and transfers, taking due consideration of exchange rate, fiscal, monetary and other policies.

EU officials agreed that:- We favour a combination of both structural and statistical approaches. The euro area dimension needs to be fully taken into account when assessing external imbalances.- The Paris communique noted that the agreed indicators would take due consideration of exchange rate, fiscal, monetary and other polices. This could be done in a descriptive way in the first stage. Exchange rate factors will be key in the second, in-depth analysis stage.- Only G20 members facing the largest imbalances should move into the in-depth stage of the exercise. Given spillovers, there are merits in subjecting large countries to a more stringent screening criterion by applying a measure for systemic importance in the indicative guidelines.

ON MANAGEMENT OF CAPITAL FLOWS

- The EU supports the development of guidelines/a framework, covering both source and recipient countries, to provide countries with guidance by the International Monetary Fund on policies to deal with capital flows. Such guidelines should have a comprehensive scope and emphasise the importance of macroeconomic and prudential policies and structural measures as primary capital flow management tools.- The group will have to be careful not to signal to markets that the G20 endorses a general use of capital controls.

ON GLOBAL LIQUIDITY MANAGEMENT

Part of the global monetary overhaul could entail the inclusion of the currency of the world's now second biggest economy, China, in the basket that makes up the Special Drawing Right (SDR) -- an international reserve asset of the IMF. Some economists say a bigger base for the SDR could help cut an overreliance on the dollar as the world's reserve currency.The basket is now made up of four currencies -- the dollar, euro, pound sterling and Japanese yen. Created in 1969, it does not reflect the rising economic importance of China.

The EU position is the following:- On the Special Drawing Right (SDR), the EU is ready to discuss the broadening of the SDR basket to better reflect economic realities. We take note of the strong interest expressed by China of having the renminbi in the SDR basket. A decision should follow clear and transparent criteria and entail adequate preconditions for the admission of the currencies concerned to ensure the stability of the basket.- The EU is open to discussing the role of the SDR and how it could possibly contribute to improving the system, although many technical, political and legal difficulties will need to be addressed.

ON FINANCIAL REGULATORY REFORM

- The key issues for the April meeting from an EU standpoint are:

1. ensuring the timely and consistent implementations of Basel II and Basel III measures by all G20 countries as well as other jurisdictions globally, with a particular focus on U.S. implementation

2. ensuring the development and international implementation of a consistent framework for all Systemically Important Financial Institutions (SIFIs)

3. a full and consistent implementation of the remuneration standards which were endorsed by all members of the G20, accompanied by a rigorous peer review process within the FSB, allowing for peer pressure aimed at fostering further implementation

4. further progress on identifying and listing non-cooperative jurisdictions

5. agreeing on the scope of the work on the shadow banking system including the identification of shadow banking activities and entities and the mapping exercise of data and regulation on this field.

ON COMMODITIES

The EU should stress:- the need to improve the quality and availability of data on physical and derivatives markets, including position reporting.- the need for an effective regime to identify and prevent market abuses- adequate and proportionate financial regulation, especially for participants that trade in financial derivatives
- to assess the power and tools for the respective supervisors to ensure more transparency of physical and derivatives markets while preserving market liquidity.
(Reporting by Jan Strupczewski; Editing by Ruth Pitchford)

No agreement to include yuan in SDR for now - BRICS official
BEIJING,| Thu Apr 14, 2011 9:40am IST

BEIJING, April 14 (Reuters) - There is no unanimous agreement for the yuan to be to be included in the currency basket that forms the Speacial Drawing Right, or SDR, an official from the BRICS group of emerging powers said on Thursday.The BRICS group, which comprises Brazil, Russia, India, China and South Africa, is meeting in southern China to discuss trade and investment.There is a need for a broad-basing of the international monetary system. The SDR is an instrument to do that, but we still have no unanimity on the inclusion of the Chinese currency in the SDR as of now, the official said. India has said that the SDR is an accounting mechanism used by the IMF and countries such as Brazil have also said that this (the yuan) should be convertible first.(Reporting by Abhijit Neogy; Editing by Chris Lewis)

BRICS demand global monetary shake-up, greater influence By Abhijit Neogy and Alexei Anishchuk SANYA, China | Thu Apr 14, 2011 2:00pm IST

SANYA, China (Reuters) - The BRICS group of emerging-market powers kept up the pressure on Thursday for a revamped global monetary system that relies less on the dollar and for a louder voice in international financial institutions.The leaders of Brazil, Russia, India, China and South Africa also called for stronger regulation of commodity derivatives to dampen excessive volatility in food and energy prices, which they said posed new risks for the recovery of the world economy.Meeting on the southern Chinese island of Hainan, they said the recent financial crisis had exposed the inadequacies of the current monetary order, which has the dollar as its linchpin. What was needed, they said in a statement, was a broad-based international reserve currency system providing stability and certainty -- thinly veiled criticism of what the BRICS see as Washington's neglect of its global monetary responsibilities.The BRICS are worried that America's large trade and budget deficits will eventually debase the dollar. They also begrudge the financial and political privileges that come with being the leading reserve currency.The world economy is undergoing profound and complex changes, Chinese President Hu Jintao said.The era demands that the BRICS countries strengthen dialogue and cooperation.

In another dig at the dollar, the development banks of the five BRICS nations agreed to establish mutual credit lines denominated in their local currencies, not the U.S. currency.The head of China Development Bank (CDB), Chen Yuan, said he was prepared to lend up to 10 billion yuan to fellow BRICS, and his Russian counterpart said he was looking to borrow the yuan equivalent of at least $500 million via CDB.We think this will undoubtedly broaden the opportunities for Russian companies to diversify their loans, Vladimir Dmitriev, the chairman of VEB, Russia's state development bank, told reporters.

ALL DOWN TO THE BRICS

The call by the BRICS for a new monetary order are not new.But, coming hours before a meeting in Washington of finance ministers from the Group of Seven industrial nations, the traditional power brokers of the world economy, Thursday's communique showed the growing confidence of emerging markets.Burdened by heavy debt, the United States, the euro zone and Japan are struggling to shake off the lingering effects of the 2008 global financial crisis. Rich countries will grow 2.4 percent this year and 2.6 percent in 2012, the International Monetary fund forecast this week. By contrast, less well-off countries have emerged relatively unscathed. The IMF is forecasting that emerging and developing countries will grow 6.5 percent both this year and next.The quality and the durability of the global economic recovery process depends to a great measure on how the BRICS economies perform, Indian Prime Minister Manmohan Singh said.The leaders reviewed the global role of the Special Drawing Right, the IMF's accounting unit and reserve asset, which some experts believe could grow into a partial substitute for the dollar.But they stepped around the issue of whether the yuan should join the SDR, saying only that they welcomed discussion of the composition of the SDR's basket of currencies.A member-country official said the group was split on whether China's currency, which cannot be freely exchanged except for trade and investment purposes, met the criteria for being part of the SDR.There is a need for a broad-basing of the international monetary system. The SDR is an instrument to do that, but we still have no unanimity on the inclusion of the Chinese currency in the SDR as of now, said the official, who declined to be identified.The SDR now comprises the dollar, the euro, the Japanese yen and the British pound.India has said that the SDR is an accounting mechanism used by the IMF, and countries such as Brazil have also said that this (the yuan) should be convertible first, he added.Though keen on a more diverse global monetary order, Beijing has given no indication that it is ready to make the yuan freely tradable or to dismantle capital controls as the price for the prestige of being part of the SDR.

BROAD-BRUSH TREATMENT

Emerging economies have already won more say in the way the IMF is run, but the BRICS leaders said they were still under-represented.We ... agreed on the need for the reform of international financial institutions in order to promote a just economic order, South African President Jacob Zuma said.On the hot topic of capital flows, the BRICS called for more attention to the risks posed by massive cross-border flows of money but went no further.The group said the world economy, of which its members make up nearly a fifth, still faced headwinds.The developments in west Asia and north Africa, and the aftermath of the huge tragedy that befell Japan, have introduced fresh uncertainties in the global recovery process, Singh said.Swings in commodity prices are also a prime area of concern for the BRICS. China is the world's biggest importer of many commodities; the other BRICS members are major exporters of natural resources.China hopes the group will be able to agree on a common stance on commodity price fluctuations at the G20 summit in the French city of Cannes in November.The main aim of the BRICS is to forge a common emerging-market negotiating stance on issues from climate change to world trade and to act as a counterweight to the West in settings such as the Group of 20 forum of advanced and developing economies.

The BRICS caucus is a work in progress. Thursday's brief meeting, held under tight security at a beach-front hotel, was only its third summit and the first to include South Africa.The group brings together five countries that, though frequently united in their disinclination to do the West's bidding, are a political and economic mosaic.Our economic potential, political influence and our development prospects as an alliance are exceptional, Russian President Dmitry Medvedev said.(Additional reporting by Ben Blanchard, Zhou Xin and Ray Colitt in Sanya and Chris Buckley in Beijing; Writing by Alan Wheatley; Editing by Ken Wills and Dean Yates)