China Drops The U.S. Dollar
Beijing-China (Nov 26) The People’s Bank of China (PBOC) recently announced they will stop stockpiling US dollars, described as a time bomb without a timer. This dollar departure was also a recommendation from Nobel laureate Joseph Stiglitz posted on the Wall Street Journal 3 years before this announcement.
Yi Gang, a deputy governor at the PBOC, stated that it isn’t in China’s favor to stockpile foreign exchange reserves which is reported to total just over 3 trillion dollars.
As Renminbi (RMB) SWIFT payments have grown 17 fold over the past 2 years and anyone not native to China has the freedom to open bank accounts that handle RMB, this move may not be a direct attack on the dollar. But it is more likely a part of China’s strategy to make the RMB the world reserve currency.
China’s General USD Economic Coverage Leading Up To This Announcement
At this point, an announcement of this magnitude should be taken in context with previous economic stories leading up to this decision.