Preparing for the End of the Dollar Era: China Plans SDR Bond Issuance

The dollar won't cease to be a reserve currency, but the path to the SDR or multi-currency future is being forged by competitors such as China. The political need will drive this development: countries need an asset than cannot be rendered worthless by a hostile U.S. government.

The evening of July 23, during the G20 finance ministers and central bank governors People's Bank of China International Secretary Zhu Jun held in Chengdu, told Caixin reporters, is preparing for an international development agency's first SDR-denominated bond issue, the relevant details are still Finally, under negotiation. "SDR-denominated bonds can provide a wide range of investment products, reducing the exchange rate and interest rate risks, the official beginning of the investors particularly appealing. As the market continues to advance construction will attract more private sector involvement, thereby gradually SDR bonds development of the market up. "

Zhu Jun also introduced a long time, the use of enhanced SDR faced with a problem that developed countries hold more SDR but reluctant to use, but more needs to hold more willing to use the emerging markets and developing countries rarely SDR current G20 parties also studying how to make SDR better play its role as a supplementary reserve asset.
SDRs also raise the possibility of a global central bank, likely the IMF, unrestrained by any government. If you think central banks are doing a great job, the IMF as central bank will do an even greater job.

Finally, although this is often reported as a negative for the U.S. dollar, the greenback cannot serve as the world's reserve currency for much longer, for reasons of math. The dollar could barely handle the rise of China and it would be unable to handle a similar rise by India. One way or another, the dollar is set to decline along with the U.S. economy in terms of relative size. Both can continue to grow, but they will become a smaller part of the global economy. This process was accelerated by the use of financial weapons and economic sanctions in recent years, and will likely accelerate further should Trump win and reorient American policy towards the national interest.

Caixin: 独家∣首只SDR计价债券有望8月底发行

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