RMB enters the SDR, but according to Beijing this is only the beginning
Late on Friday in the U.S., which was October 1 for many parts of the world, the Chinese RMB currency was officially placed into the IMF’s Special Drawing Rights basket. And despite the fact that China has been internationalizing the Yuan at an ever accelerating rate since 2013, this move into the SDR will be just the first step towards much greater changes according to Beijing.
Last month China was given the power over internationalizing and selling M SDR bonds which would help expand the international currency for use in trade settlement. And this move, coupled with the RMB’s increase in global settlement, is a de-facto Bretton Woods type maneuver that has the intended purpose of ending the polar reserve currency mechanism that has run the global financial system for the past 70 years.
But as noted out of China’s government earlier today, the RMB’s inclusion into the SDR is just the first step into a much bigger game, and economic analyst Jim Rickards on Sept. 29 announced what and when the next move will probably take place.
What this means in a nutshell is that a consortium of nations, led primarily by China, now have the power to remove the U.S.’s autonomous control over the IMF and other facets of global finance, and will seek to even out the voting rights within the dedicated financial infrastructures currently holding sway over the global monetary system.
China has never sought to usurp the U.S., nor take its place by having a singular reserve currency as the medium of exchange in global trade settlement. However, they are no longer in a position to have to rely upon the dollar to be economically sustainable, or in U.S. hegemony to carry out their sovereign goals of bi-lateral trade.
The first step in a long game of transition is now complete, and the next steps will be to both end the petro-dollar’s hold over global trade, and to end America’s domination over the world’s monetary system. After that, the steps leading towards the end game appear to be a return of the gold standard in some form or fashion, and to help rebuild the world’s overall economy that is now collapsing under its own weight of inescapable debt.