On August 5 2013 the prestigious Chinese Market Journalpublished an article by Yao Yudongof Monetary Policy Committee of the People's Bank of China.Two
or three things the author mentions there warrant special attention.
One is the idea to boost the role of International Monetary Fund (IMF)
to provide the world economy with liquidity. It’s not that the Monetary
Fund is to become a kind of global central bank, which would issue its
own supranational currency, something like the special drawing rights (SDR) it issued in small quantities four dozen years back. No, the YaoYudong’s article puts it differently; it says it is expedient to go back to the times of Bretton Woods – the
United Nations Monetary and Financial Conference, which set up a system
of rules, institutions, and procedures to regulate the international
monetary system. It was the first example of a fully negotiated monetary
order intended to govern monetary relations among independent
nation-states. The chief features of the Bretton Woods system were an
obligation for each country to adopt a monetary policy that maintained the exchange rate by tying its currency to the U.S. dollar and the ability of the IMF to bridge temporary imbalances of payments.
The gold standard had existed before WWI. This time the convertibility
was not complete, but rather partial, because only one currency was tied
to gold – the one of the United States. The reason for doing so was the
amount of monetary gold reserves the USA accumulated during the WWII
years. It promised to take on the responsibility and provide for free
exchange of dollars for gold.
The People's Bankof China representative does not propose to go back to gold-dollar standard today.In 1971, the United States unilaterally terminated convertibility of the US dollar to gold. This brought the Bretton Woods system to an end and saw the dollar become fiat currency. This action created the situation in which the United States dollar became a reserve currency used by many states. At the same time, many fixed currencies also became free-floating.Actually
Washington imposed on the world the Federal Reserve System-issued
papers, which lacked any back-up, as the universal reserve currency.
The most interesting Yao Yudong’s proposal is the one, which envisions
the world’s return to the use of gold as a standard, but not the
dollar-gold standard. That is it’s not the US dollar only this time (at
least not only), but rather the currencies backed up by significant
amount of monetary gold reserves stored in central banks and treasuries
storages. Formally, the United States is still the world gold reserves
leader with around eight thousand tons kept in storage. Still, everyone
understands these are iffy statistics, there are serious doubts the
mentioned eight thousand tons are still stored in the famous Fort Knox.
There is a great chance the gold is kept far away from the storage and
has been used as gold credits and gold leasing for Wall Street and
London City banks. If there is something in the vaults – it may be
fakes, the so-called tungsten gold, for instance.
Many experts believe it’s not the United States only who provides
unreliable statistics. The Western developed countries exaggerate their
gold metal reserves which to great extent are squandered by banksters
using the very same credit-leasing schemes. At that, there are states
which keep away from making publicity of the fact they have fast growing
gold reserves. China is the one. The figures for the People's Bank of China
remain by and large the same during a number of years (a bit less than
1000 tons) against the backdrop of China’s leading position among gold
producers (around 400 tons a year) adding the yellow metal to what it
has in state’s coffers. Besides, it annually brings in a few hundreds
of gold through Hong Kong. Simple calculations based on official
statistics related to gold production and imports show that today China
is to have no less than five thousand tons of precious metal. Still,
some experts believe the figure is no less than ten thousand exceeding
the one for the United States.
The official representative of the People's Bank of China
does not put it straight; he avoids saying in no uncertain terms that
he stands for switching to the yuan-based gold standard. But the article
leads tothis conclusion. Mr. Yao Yudong lets know the yuan may take the dollar’s place and have the very same status the US currency enjoyed after WWII…
There have been a lot of publications devoted to the golden yuan recently. But the official Beijing has never mentioned any plans to make the yuan a golden currency. Looks like that’s what the Rothschilds clan (I mean the world financial elite involved in gold business) wants. It’s a well-known fact that it was the Rothschild family
who initiated the golden standard in the XIX. It started in Great
Britain and then was imposed upon the whole world (including Russia
which thanks to efforts of Sergey Witte, who was Financial Minister,
switched over to golden ruble in 1897). There are reasonable
grounds to believe the Rotshields want to play a win-win game (and a
very profitable one) called the “golden standard”. Moreover, the
Federal Reserve System, which has the Rotshields and the Rockefellers as
the major shareholders, is bursting at the seams. So, the Rotshields
are ready to leave the printing-press to its fate and saddle up the
“golden calf”.
Someone should be the first to tie national currency to gold. Once
done, other things will not take much time to take place. China appears
to be chosen by the Rotshields for this role, they created “the most
favorable nation” regime for it to allow the country accumulate the
initial gold reserves, they dropped hints to Beijing that the yuan was
to play a special role in the world.
Now, let’s put it this way, the Peoples’ Republic of China does need gold reserves (as a strategic back-up). But it needs no golden yuan. This currency is strong enough globally without being propped up by gold. China
has concluded deals with many countries, including Japan, Russia,
Brazil and others, which envision the use of national currencies in
interstate trade. It has also reached currency swap accords (the
exchange of currencies) to avoid resorting to euro or dollar. The People's Bank of China has signed such an agreement with the Bank of England.
The currency swap accords are discussed by the Bank of China with the
central banks of Switzerland and France. Iran supplies oil getting
payments in Chinese currency to buy commodities in China. The
use of yuan instead of dollar (as well as other national currencies)
allows the so called “rogue” states to successfully get around the
sanctions imposed by Washington…According to various sources,
payments in yuan are accounted for no more than 1% of international
transactions. Not very impressive at first glance. But the number of
yuan settled international transactions is constantly on the rise,
especially talking about the financial market speculative operations,
the lion’s share of such deals is yuan settled. The number of paymentsin yuans in the global market has grown from 0 to 12 percent in only five years, since 2008 to 2013. By and large, it corresponds to the Chinese share of the world economy.
The Yao Yudong’s publication has stirred great commotion in the
financial world. Does it mean that Beijing is shifting its financial
policy in the Rotshields’ direction? Or is it just a sign the country’s
vertical of power is getting weakened and some officials may boldly
speak out without looking back at what the ruling party says?
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