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#15038193
https://www.irishtimes.com/business/mar ... 3fmode=amp

Lets not forget these bombshells too..

Mark Carney: dollar is too dominant and could be replaced by digital currency

"A digital currency “could dampen the domineering influence of the US dollar on global trade”, Carney said in a speech at the gathering of central bankers from around the world in Jackson Hole, Wyoming. “If the share of trade invoiced in [a digital currency] were to rise, shocks in the US would have less potent spillovers through exchange rates, and trade would become less synchronised across countries."

https://www.google.com/amp/s/amp.thegua ... l-currency

Buh bye greenback...

Looks like the euro and new cryptocurrencies are the hot new thing. ;)
Last edited by Presvias on 01 Oct 2019 12:30, edited 1 time in total.
#15038314
Presvias wrote:A while back the EU pade a push to 'dislodge' the dollar in the energy sector..

https://www.google.com/amp/s/www.forbes ... tions/amp/


I said in another thread somewhile back, that Russia, with China, should conduct their trade in a common currency, that is isolated from the American financial & legal system.

I think it was in a thread relating to American sanctions against Russia,possibly, over Crimea & in China's case over 'America First' under TRUMP.

The American $ has long been a 'petro-currency', which has allowed America to fund it's increasing long term debt without any hindrance, that has allowed them to keep the money tree growing, by keeping the $ printing presses pumping out $Millions every minute of the day for decades.

An example of how the real value of money has fallen in recent years, is my grandaughter's partner, a pawnbroker, he bought 42 Krugerands from a customer last week, he was happy to pay the customer £1,000 per unit,if my memory serves me correctly, the price back in the mid 1960's was about £25,it's now worth $1,500 per coin, which is 1oz pure gold & has risen 4.5 times snce 2000.

He buys,sells,as well as retains expensive Rolexes for investment purposes, making a good living from it,much of which is sold to online buyers, after proper credibility checks with the banks have been carried out.
Both he, as well as his customers are happy to trade,he never quite understands why his customers sell at the 'wrong' time, but that's to his advantage.

All together, I read from his information, that there is plenty of liquid cash being hoarded, the economy rest on the money awash in private hands, the reason that people 'hoard' their little 'investment' nest-eggs is because money has little real value & with negative returns on cash in deposit.
I baulk at the U.K's debt by comparison, but debt has a corrosive effect in the financial system, distorts economies as a result & devalues the worth of money as the universal medium of distribution & exchange.

It's a pity that Russia, with China haven't grouped together with other trading partners to agree to a form of currency in which international trade & financial transactions can take place, because Jean-Claude JUNCKER is right to suggest a change in the system,but, for which the euro has,IMHO, compromised the currency by a degree over the pumping of more money into the E.U spending budget.
Last edited by Nonsense on 01 Oct 2019 13:39, edited 2 times in total.
#15038316
Presvias wrote:
https://www.irishtimes.com/business/mar ... 3fmode=amp

Lets not forget these bombshells too..

Mark Carney: dollar is too dominant and could be replaced by digital currency

"A digital currency “could dampen the domineering influence of the US dollar on global trade”, Carney said in a speech at the gathering of central bankers from around the world in Jackson Hole, Wyoming. “If the share of trade invoiced in [a digital currency] were to rise, shocks in the US would have less potent spillovers through exchange rates, and trade would become less synchronised across countries."

https://www.google.com/amp/s/amp.thegua ... l-currency

Buh bye greenback...

Looks like the euro and new cryptocurrencies are the hot new thing. ;)



Crypto has a lot of growing pains. Not ready for prime time, although that could change quickly if a government decides to adopt it, and can also tame the unruly beast.

Strictly speaking, being the reserve currency is a convenience that could change overnight. In the real world, people and countries are very reluctant to rock the boat. Which means reserve status tends to stay put, even when there is cause to change.

I am posting mostly for one detail. America has been abusing it's power, esp. over the last couple of years. An economic crisis that shakes confidence in the dollar would push people to flee the dollar. That would not exactly be good for us. But if you're going to put someone like Trump in charge, you deserve it.
#15038318
I'd much rather see the Euro which is a distributed currency, than one controlled by a central entity (US or more especially, China), so this isn't a bad development.

I don't believe crypto will work as some sort of global reserve currency, it's too inflexible.
#15038323
Rancid wrote:I'd much rather see the Euro which is a distributed currency, than one controlled by a central entity (US or more especially, China), so this isn't a bad development.

I don't believe crypto will work as some sort of global reserve currency, it's too inflexible.


Money is a 'commodity', no different to any other, subject to market laws of 'supply,demand & the price mechanism.
With a 'crypto-currency', it's not necessary to hold a 'reserve' as it's a fluid market where supply & demand are always in balance.

'Floating' exchange rates are the most successful change in international currencies following the abandonment of the 'Gold Standard', it would be foolish to change that system, it allows the markets to adjust currency values according to each country's trade 'balance' accordingly, in the global currency trading system.
The best way of restoring confidence into money markets, is to abolish all of the world's Central Banks, after using the gold reserves & other state assets to pay off existing debts.

That would allow people to be the masters of their own destiny & not the state which would shrink.
#15038328
Presvias wrote:Looks like the euro and new cryptocurrencies are the hot new thing. ;)

The Euro is in peril, because the EU is in peril. Bitcoin has radical and inexplicable changes in value, so it is not stable enough. Also, since it is built on blockchain, which has some significant scalability issues, it is unlikely that Bitcoin can serve as a digital currency. It can be more like artificial gold.

Presvias wrote:A while back the EU pade a push to 'dislodge' the dollar in the energy sector..

The petrodollar concept also comes with security guarantees that the Eueo cannot provide. The EU does not even defend Europe for all intents and purposes. Energy is a dangerous situation for the EU. The US has become energy independent and become considerably less interested in military forays in the Middle East as a result. At the same time, the internal contradictions of the Saudi State--diversity is definitely NOT a strength--illustrates that Saudi Shia are probably helping the Houthis and Iran against King Salman and Prince Mohammed's government. With recent attacks on Gwahar and three Saudi brigades, the US and UK are the only credible military forces that can come to Saudi Arabia's aid. The Euro is not going to replace the dollar, because the European Union is not going to defend Saudi Arabia.

Nonsense wrote:I said in another thread somewhile back, that Russia, with China, should conduct their trade in a common currency, that is isolated from the American financial & legal system.

Russia could command that for the Ruble, because it is a net energy exporter and doesn't depend on external powers for its defense. However, that would only be a boon for Russia's banking sector. They could price in Yuan so that Russians could import more consumer staples from China more cheaply. The Yuan however can't effectively replace the dollar, because China is a net exporter. This is why the Belt and Road initiative is proving to be a financial albatross for countries.

Nonsense wrote:The American $ has long been a 'petro-currency', which has allowed America to fund it's increasing long term debt without any hindrance, that has allowed them to keep the money tree growing, by keeping the $ printing presses pumping out $Millions every minute of the day for decades.

The price is that the US Fifth Fleet is parked in Bahrain and keeps the Strait of Hormuz open, and the US provides security guarantees to Kuwait, Bahrain, Qatar, UAE and Saudi Arabia, while the UK has significant influence in the UAE and Oman. The US always has a carrier strike group in the region with up to two more ready to deploy there at any time. It's not like it's a free operation.

Nonsense wrote:It's a pity that Russia, with China haven't grouped together with other trading partners to agree to a fixed parity currency in which international trade & financial transactions can take place, because Jean-Claude JUNCKER is right to suggest a change in the system,but, for which the euro has,IMHO, compromised the currency by a degree over the pumping of more money into the E.U spending budget.

The EU does not have a navy to keep the Straits of Hormuz open. So gulf states will most likely price in the national currency that defends their borders.

late wrote:But if you're going to put someone like Trump in charge, you deserve it.

How about Obama? Quantitative easing was an Obama policy. Interest rates went up and balance sheets declined under Trump's presidency. That's putting pressure on the US economy now.
#15038343
blackjack21 wrote:
How about Obama? Quantitative easing was an Obama policy. Interest rates went up and balance sheets declined under Trump's presidency. That's putting pressure on the US economy now.



I liked the rest of your post, nicely done.

Some sort of stimulus was baked in the cake. Bush had already started doing that. Some macroeconomists think we should have done more than we did (although they would also have liked to see the money put to good use, such as building infrastructure).

If you want to talk pressure, you can't ignore spending on the empire combined with the absurd tax cuts that Republicans started doing during the Reagan years.
#15038346
One aspect of this which hasn't been discussed is counterfeiting. If there are more countries using any particular currency, the attraction of counterfeiting grows, and that's not good for anyone...
#15038413
BigSteve wrote:One aspect of this which hasn't been discussed is counterfeiting. If there are more countries using any particular currency, the attraction of counterfeiting grows, and that's not good for anyone...


Criminals can't really be bothered counterfeiting currencies nowadays as the act is so easily detectable,partly because of better security measures.

I remember well, the 'old' £5 notes, I think they were a size A2 or similar,but, anyway, were they in circulation today, they wouldn't be worth the paper they were printed on, because they were so easy to forge, even Germany in WW2 were printing them,in order to undermine the British economy, how times change.
#15038420
blackjack21 wrote:The Euro is in peril, because the EU is in peril. Bitcoin has radical and inexplicable changes in value, so it is not stable enough. Also, since it is built on blockchain, which has some significant scalability issues, it is unlikely that Bitcoin can serve as a digital currency. It can be more like artificial gold.

The petrodollar concept also comes with security guarantees that the Eueo cannot provide. The EU does not even defend Europe for all intents and purposes. Energy is a dangerous situation for the EU. The US has become energy independent and become considerably less interested in military forays in the Middle East as a result. At the same time, the internal contradictions of the Saudi State--diversity is definitely NOT a strength--illustrates that Saudi Shia are probably helping the Houthis and Iran against King Salman and Prince Mohammed's government. With recent attacks on Gwahar and three Saudi brigades, the US and UK are the only credible military forces that can come to Saudi Arabia's aid. The Euro is not going to replace the dollar, because the European Union is not going to defend Saudi Arabia.


This is just Trumpist proper-gander. Why'dya think the EU wanna make an EU army?

Bellecks to NATO.

And how is the 'Euro in peril'? It's overhyped news spread by proponents of the dollar and outmoded, corrupt rating agency bureaymucraps. It's just more propaganda that you're attempting to assert as fact..the dollar is actually in much more peril as acknowledged by um, let me think...multi central banks, large banks, IMF etc....
#15038445
Nonsense wrote:Criminals can't really be bothered counterfeiting currencies nowadays as the act is so easily detectable,partly because of better security measures.


And those security measures will continue to be improved upon. Why? Because people will figure out a way to counterfeit them...
#15038511
BigSteve wrote:And those security measures will continue to be improved upon. Why? Because people will figure out a way to counterfeit them...


Talking about counterfeit, a question...
During my last trip to Thailand I found that the money exchange booths refuse to accept the older 100 dollar notes (the ones without colour). Are they still officially valid ?
#15038749
Ter wrote:Talking about counterfeit, a question...
During my last trip to Thailand I found that the money exchange booths refuse to accept the older 100 dollar notes (the ones without colour). Are they still officially valid ?


Yes, they absolutely are.

When I was in Italy last spring I was converting currency into Euros and had three of them. They damn near went into committee to determine if the bill was genuine or not...
#15039841
BigSteve wrote:And those security measures will continue to be improved upon. Why? Because people will figure out a way to counterfeit them...


It is very, very hard to counterfeit euroes, apparebtly.

And it'd be difficult to 'fake' crypto currencies. :)
#15039890
Presvias wrote:It is very, very hard to counterfeit euroes, apparebtly.


But the point remains that there will always be those who will end up being successful at doing it...
#15039910
BigSteve wrote:Yes, they absolutely are.

When I was in Italy last spring I was converting currency into Euros and had three of them. They damn near went into committee to determine if the bill was genuine or not...

Well if it makes you feel any better, I was trying to exchange money in China.

In my passport photo I had a beard, but I didn't when I was at the bank. So they went into committee also, and insisted they keep my passport. I said fuck you, and left the Chinese person I was with at the bank as insurance, and went back to my room to retrieve every piece of ID I had.
#15039926
Trump has weaponized the dollar. This drives the efforts to find an alternative currency for international trade so as not to be hostage to US foreign policy. The Euro is the only available currency fulfilling all the requirements for an international currency:

- the EU has a deep and broad economy

- the Euro is a stable currency, limits on deficits will keep it that way

- while the FED and most other central banks come increasingly under pressure to serve political aims, the independence of the ECB is guaranteed

Nonsense wrote:I said in another thread somewhile back, that Russia, with China, should conduct their trade in a common currency, that is isolated from the American financial & legal system.


Money has been so successful because it facilitates trade a lot more than barter trade. It can be exchanged freely for other goods. Neither the Ruble nor the Renminbi can fulfill this function in international trade. Even Russian oil companies don't want Ruble because it's use in international trade is limited.

The only real alternative to the dollar is the euro. European leaders are reluctant to push that option because they don't want to endanger the status quo and a global crisis by puncturing the dollar economy.

Presvias wrote:Looks like the euro and new cryptocurrencies are the hot new thing. ;)


A currency for international trade needs a substantial economy to back it up. Some here have even said it needs an army, but I disagree. That leaves only the euro:

Euro to Benefit if Russia & Others Dump the Dollar

- Russia, China and others steadily reducing exposure to Dollar

- Euro increasingly used as substitute reserve currency

- Could explain resilience in the face of ECB reversal


A growing number of disaffected states are strategically trying to reduce their reliance on the U.S. Dollar for routine international transactions, using the Euro or local currencies instead. This trend may explain the common currency’s unexpected resilience in the face of considerable headwinds in 2019.

The U.S. Dollar is the world’s largest reserve currency. It is used in most transactions involving trade in commodities, especially oil, and also for many international financial transactions and large deals. The U.S. Dollar’s preeminence in the world financial system provides it with stability due to broad global demand.

However a retreat from globalisation via China-U.S. trade wars, and an increasing hawkishness in foreign policy by the U.S., Russia and China could offset the Dollar's dominance.

Russia is said to be trying to de-dollarise after President Vladimir Putin pledged to reduce the country’s dependence on the U.S. Dollar following the imposition of U.S. sanctions over its incursions into Ukraine and the use of prohibited nerve agent Novichok in the attempted assassination a UK-based former spy.

The Euro has been the unlikely winner in the war on the Dollar’s dominance and has come to replace the Dollar in all of Russia’s oil exports to China.

“The share of Euros in Russian exports increased for a fourth straight quarter at the expense of the U.S. currency, according to central bank data,” says Andrey Biryukov in an article on Bloomberg News. “The common currency has almost overtaken the Dollar in trade with the European Union and China, and trade in rubles with India has surged. The dollar’s share in import transactions remained unchanged at about a third.”

The total share of Russian exports to China transacted in U.S. Dollars fell to below 50% for the first time in history in Q1 of 2019, and showed a sharp fall from 75% in 2018.

Meanwhile, the share of Russian exports traded with China in Euros increased 10-fold.

Image

“The Euro’s share in payments of Russian exports to China increased tenfold over the year from 0.7% in the first quarter of 2018 to 37.6% in the first quarter of 2019,” says the Moscow Times. “The Euro is increasingly being used in payments for crude oil - Russia’s main export to China - in what’s been seen as a deliberate move away from the petrodollar because of sanctions risks.”

The Euro has now also almost surpassed the Dollar as the currency of choice for Russian exports to the EU.

Image

Russia still relies on the Dollar for more than half of its $687.5bn annual total trade even though less than 5% of that is directly with the U.S.

A large part of Russia’s motivation to switch is that companies suffer delays on almost a third of international payments when they are in Dollars because Western companies have to first check with the U.S. whether the transactions are allowed, Russian Finance Minister Anton Siluanov said in December.

It is not just in the realm of trade that countries are trying to lessen their reliance on the Dollar but also in payment systems. The most widely used interbank payment messaging and transaction service, for example, is the Dollar-based SWIFT (Society for Worldwide Interbank Financial Telecommunication) service, and here too Russia is trying to diversify.

“Russia created the SPFS payment system “which began in 2014 in response to Washington’s threats of disconnecting Russia from SWIFT. The first transaction on the SPFS network involving a non-bank enterprise was held in December 2017,”” says Timothy Alexander Guzman, a researcher at The Centre for Research on Globalization (CRG), an independent research and media organization based in Montreal, citing an article by Tim Rickards author of “Currency Wars”.

The EU is also considering setting up its own payment system separate from SWIFT given the increasing threat of sanctions or tariffs from the U.S, says Guzman.

A new financial system was mention by German Foreign Minister Heiko Maas who recently called for a new EU-based payments system independent of the U.S. and SWIFT (Society for Worldwide Interbank Financial Telecommunication) that would not involve Dollar payments.

Jim Rickards describes the SWIFT system as the “nerve center of the global financial network," adding, "all major banks transfer all major currencies using the SWIFT message system. Cutting a nation off from SWIFT is like taking away its oxygen.”

India is another country which is moving away from the U.S. Dollar in its trade with Russia.

“The most dramatic shift is visible in Russia’s $11 billion trade with India. The ruble accounted for three-quarters of total settlement in exports between the two emerging markets after they agreed on a new payment method through their national currencies for multi-billion-dollar defense deals,” says Andrey Biryukov.

India already pays for its oil imports from Iran using Rupees to bypass U.S. sanctions on the rogue state.

It bought a record 27.2m tons of Iranian crude last year, a 114% increase. India would ignore the US trade sanctions against Iran, said former foreign minister Sushma Swaraj. “India will comply with UN sanctions and not any country-specific sanctions,” said Swaraj.

Other countries bypassing the use of the Dollar include Iraq and Iran and Russia and Syria.

Pakistan is considering replacing the U.S. Dollar with the Yuan for trade with China, according to an article by Reuters which appeared in December 2017, entitled ‘Pakistan considering plan to use yuan in trade with China’.

There is speculation the move came after President Trump heavily criticised Pakistan on Twittersphere for providing cover for terrorists escaping from Afghanistan whilst at the same time happily taking $33bn a year in aid from the U.S.

More worrying for the U.S. is how China is slowly eclipsing the U.S. as the dominant influence in the subcontinent. It is currently collaborating heavily with Pakistan to build the “One Belt, One Road” trade route from China to Europe, which would revive the ancient silk route.

The rejection of the Dollar by a handful of states hardly suggests an end to its preeminent reserve status. However, it is a worrying sign, especially given China and the EU’s potential involvement and the increasingly tense trade relations between the U.S. and many of its partners. The more enemies the U.S. makes the more the countries may come to reject the U.S. Dollar as a unit of international exchange.

The move away from the Dollar as the primary reserve currency and increasing reliance on the Euro may, in part, explains the common currency’s resilience in 2019 despite a complete 180-degree policy turn by the European Central Bank (ECB) - something which would normally see a currency decline sharply.

Weekly EURUSD

At the start of the year the ECB was of the view that it would probably have to raise interest rates sometime towards the end of 2019, however, pretty quickly this view drastically altered to not expecting any rate hikes until 2020, then not expecting any at all, to eventually expecting possibly cuts and QE.

The Euro has not declined as heavily as might have been expected as a result of this pivot and although it fell from 1.1305 to 1.1195 after the March 7 ECB meeting when an extension of stimulus in the form of cheap bank loans or TLTROs was unveiled, it spent the rest of March rallying to a high of 1.1450.

It is possible that part of the reason is the impact of the increased use of the Euro in international transactions as an alternative to the U.S. Dollar.


blackjack21 wrote:The Euro is in peril, because the EU is in peril.


Following the Brexit debacle, the EU is now irreversible. Even the populist fringe is not considering leaving the EU or the Euro anymore.

The petrodollar concept also comes with security guarantees that the Eueo cannot provide.


EU countries have defense capacities far exceeding those of Russia. European countries run a number of international missions to protect sea lanes and the like. Without the British veto on EU defense cooperation, these capabilities can be further enhanced. With all it's expensive military hardware, the US cannot even protect its major ally in the ME against a simple drone strike.

Due to fracking the US is now self-sufficient in fossil fuels and won't continue to fund a military presence in the ME it does not need. In the medium and long-term, renewable energy will change geopolitics. Energy will be produced locally and the US's naval forces will no longer be needed - if they ever were.
#15042715
https://www.euractiv.com/section/global ... on-threat/

Surgutneftegaz, representing 11% of oil production in Russia, is pushing buyers to agree to pay for oil in euros instead of dollars if the need arises, apparently as insurance against possible tougher US sanctions, traders who deal with the firm told Reuters.

Russia has been subject to Western sanctions since its 2014 annexation of Ukraine’s Crimea region, but Washington has threatened to impose extra sanctions, citing what it has called Moscow’s “malign” activities abroad.

The prospect that causes most alarm for Russian firms is inclusion on a Treasury Department blacklist that effectively cuts them off from conducting transactions in dollars, the lifeblood of the global oil industry.

Surgutneftegaz, whose chief executive Vladimir Bogdanov is already on a US blacklist in a personal capacity, declined to respond to Reuters questions.

“We do not comment on our commercial activity,” said the company, Russia’s fourth largest by output.

To date, Russia’s oil industry has been able to weather Western sanctions. In response to restricted access to Western finance and technology, firms have switched to borrowing from Russian state banks and developed their own technology.

Most Russian oil majors, including Rosneft and Lukoil, also sell the lion’s share of output via long-term contracts with clients, giving them more time to work out alternative forms of payment when the contracts expire.

But most of Surgutneftegaz’s exports — around 2 million tonnes per month — is sold through monthly tenders on the spot market, the largest volumes by far among its Russian peers. So it would have only around 30 days to find alternative payment methods.
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