An Overlooked News Item
Look, there are so many things going on in the world that it's easy to overlook, or simply miss, some of the major news items of the day. One such story caught my eye yesterday and it occurred to me that it definitely needed our attention.
The news item in question comes from the Europe edition of China Daily and I found it while scrolling through the links posted at Santa's (www.jsmineset.com). Let's start by giving you the link to the story and posting a full reprint for you to read.
ROME - The Bank of China's chief economist Cao Yuanzheng feels China's efforts to promote the renminbi (RMB) as an international currency is blazing a new trail in world history.
"I think this is an unprecedented process in economic history," Cao said in an exclusive interview with Xinhua on the sidelines of the "RMB: Going Global. The Bank of China Renminbi Internationalization Forum".
Renminbi development may be unprecedented but carefully mapped out nevertheless. In his remarks during the forum, Cao said the process has its roots back in the 1990s, and the veteran economist said he still believed it would take several more years for the level of international convertibility of the currency.
"I now think we can speak in terms of years and not decades," Cao said. "I cannot predict the time table, but I think we'll get there before 2020."
He said that when it happens, it will be a positive development not only for China but for the world.
"Yes, there are benefits for China but we believe it is also good for the world," Cao said. "There is deep need for another strong world currency (aside from the dollar and euro, the most used international currencies). For China, I would say there it is more of a challenge than a benefit."
Cao called for reform of the current international monetary and financial order, which dates back to the 1944 Bretton Woods Conference, which divided the world among the lines of developed and developing countries.
Cao noted that that dichotomy is now outdated, as evidenced by the fact that China, with the world's second largest economy, is a developing country. All told, three of the world's 10 largest economies are economies in transition.
"The international governance of the world financial system needs reform," Cao said.
"There are major shortcomings, since it was developed when there was a very big gap between developed and developing countries. Now, about 50 percent of the world's gross domestic product is in the developing world. So it's clear the system needs some reform. And using the renminbi as an international currency can be part of this necessary reform," he said.
The "RMB: Going Global" forum was held specifically to promote the use of the renminbi as an international currency, for trade, as a reserve currency, and for cross-border payments.
The forum featured multiple high-ranking speakers from the Bank of China, the oldest financial institution in the country.
Having now read this yourself, I think you can see why I found this to be so significant. If not, allow me to parse a few sentences for emphasis and to bring them to your attention.
- "The Bank of China's chief economist Cao Yuanzheng". Don't confuse this with the Chinese Central Bank, the People's Bank of China. The Bank of China is, instead, one of China's largest commercial banks. (http://www.boc.cn/EN/) Regardless, you don't become chief economist at one of China's largest banks without having some pretty solid connections in Beijing.
- "RMB: Going Global. The Bank of China Renminbi Internationalization Forum". Did you even know that this forum was held in Rome last week? I didn't! One would think that this would have been a newsworthy event for the "western" press but one would be wrong in that assumption. I didn't see any coverage of it anywhere.
- "Renminbi development may be unprecedented but carefully mapped out nevertheless". How many times have we discussed the Long Term Chinese Plan. These folks think in decades and centuries, NOT days and weeks. "Carefully mapped out". No doubt about that. Very likely mapped out, almost to the day.
- "The veteran economist said he still believed it would take several more years for the level of international convertibility of the currency. "I now think we can speak in terms of years and not decades," Cao said. "I cannot predict the time table, but I think we'll get there before 2020". Here's your money shot. Read that again to be certain you absorb it. "Years, not decades". "Before 2020". This is NOT some pie-in-the-sky, hair-brained gold bug conspiracy theory and we're NOT talking about 25-50 years from now. "Before 2020". I'd say that's a pretty important revelation.
- "The international governance of the world financial system needs reform," Cao said. And which country provides this "international governance"? And through which organizations is this "governance" meted out? So, have you heard much discussion lately about something called the Asian Infrastructure Investment Bank (AIIB)? Do you now begin to see what all of the hubbub is about?
- "It's clear the system needs some reform. And using the renminbi as an international currency can be part of this necessary reform," Cao said. The renminbi as an "international currency". There's that term again. And what does that mean? See the last bullet below.
- "The "RMB: Going Global" forum was held specifically to promote the use of the renminbi as an international currency, for trade, as a reserve currency, and for cross-border payments." Well, there you go. The forum was held specifically to promote the use of the RMB as a reserve currency. Specifically. To promote the use. Reserve Currency. And, again, Mr. Cao doesn't see this by the year 2055. He now thinks this occurs before 2020.
So there you have it. Brush this aside if you want. Go ahead and keep your head buried in the sand along with the rest of the Status Quotians who can't even begin to imagine a tomorrow that isn't exactly like yesterday. Here at TFMR, though, we will continue to prepare for the eventuality of these changes. And if you're still wondering what the heck this has to do with owning gold, I'll leave you with one other clue that the Chinese and The Bank of China have left hiding in plain sight: