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IPFS News Link • China

Rabo: China Can Only Achieve Its Goals Under A New Bretton Woods Regime

• https://www.zerohedge.com, by Tyler Durden

This follows the first hike in the FX reserve requirement ratio since 2007. As the article goes on to point out: "The PBOC is seeking to curb speculation in the yuan without derailing a plan to liberalize the currency and promote its global usage." Now this statement is true. It's also not going to be possible – not as a critique of China, you understand, but for anyone in that position.

You cannot liberalize a currency in order to internationalize it, and maintain exchange rate stability once global markets have a free supply of it, and can push it up, or down: unless everything else except FX rates --growth, inflation, interest rates, trade flows, and capital flows-- are held stable between China and the rest of the world. At least not without re-writing the global financial rules so we effectively go back to a new Bretton Woods (pegged to…?).


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