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Coin Geek
09-07-2025
- Business
- Coin Geek
Xi Jinping no-show at BRICS Summit: A silent power play?
Getting your Trinity Audio player ready... Optics matter in geopolitics, and when the president of the driving engine in the BRICS alliance is missing from a key summit in Brazil, it speaks volumes. When China announced that Premier Li Qiang would attend the Rio BRICS Summit in place of Xi Jinping, speculation exploded. I've read opinion pieces claiming there has been an internal coup, that the move signals China's confidence in its ability to run BRICS from behind the scenes, or that China is facing domestic issues more severe than it lets on. Given China's opaque nature, it's unlikely we'll get a straight answer anytime soon. Instead, let us look at what the move may mean from the perspective of China's long-term goals, the digital yuan, and de-dollarization. The silent treatment—is Xi sending BRICS a message? When it comes to China, what's not said matters just as much as what is. Macro investor Ray Dalio characterized the Chinese government's behavior as that of a 'strict parent,' saying: 'As a top-down country … they behave like a strict parent, and they go through that. That is their approach, we have our approach.' – Ray Dalio China has been clear about its goals: multipolarity and a global rebalancing of power, de-dollarization and financial sovereignty, reform of global governance, securing energy supplies and access to strategic resources, and promoting Chinese tech and infrastructure standards. Given the lack of meaningful progress toward de-dollarization within the bloc and the jitteriness of members as the United States counters China's moves and issues ultimatums, Xi's absence in Rio could be interpreted as quiet displeasure. Of course, China must walk the diplomatic tightrope like everyone else. It can't afford to disengage from BRICS or alienate its members, which would only hurt its long-term goals. However, it can signal frustration and subtly pressure members to move forward with the agenda. De-dollarization and the BRICS currency—what is the goal? At the last annual BRICS Summit in Kazan, Russian President Vladimir Putin called a BRICS currency 'premature.' However, that doesn't mean it's off the table, and it doesn't mean the alliance will fold and continue to use the USD indefinitely. At the Kazan Summit, member states agreed to use national currencies in internal trade. This would mean that BRICS phases out the USD and Western payment systems, such as SWIFT, in trade within the bloc. Essentially, this would cut the USD out of meaningful use in countries worth an estimated 40% of global gross domestic product (GDP) in purchasing power parity (PPP) terms, and nations containing over half the world's population would slowly cease to use the USD as a reserve currency. The effects on the USD and interest rates on U.S. debt would be measurable. I've previously written about how there's no realistic alternative to the USD in the short term, but China is playing the long game. Undermining U.S. dominance in the Global South may take decades, but as the old saying goes, a journey of a thousand miles begins with a single step. All the pieces are in place already; China's digital yuan is live, its Belt and Road Initiative (BRI) may have been scaled back, but it still has agreements with 150 countries, and loans from the BRICS New Development Bank are increasingly seen as favorable to terms offered by the International Monetary Fund (IMF) and World Bank. Putting all of this together, the picture becomes clear: China sees itself as the future leader of Asia-Pacific at a minimum, and its currency, payment rails, banks, and institutions are important tools in achieving that goal. Uncle Sam isn't happy, and he's making that clear Geopolitics is a cut-throat game of thrones, and naturally, when the current king senses a threat, he responds. Since the days when America could rely on unrivaled power, Hollywood propaganda, and global willingness to commit to democracy and liberty are long gone, the U.S. has increasingly resorted to overt pressure tactics. The re-election of Donald Trump made it clear that the status quo is over, and Uncle Sam intends to renegotiate every deal, including trade deals with allies, and it doesn't mind using a heavy hand to further its interests. Under Trump's watch, sanctions, tariffs, and talks are on one day and off the next. Anyone seen as friendly with China is a potential target of America's ire. The 47th President has made it clear that any attempts to move off the dollar standard will never be allowed. During the Rio summit, he announced an additional 10% tariffs on BRICS-aligned nations. The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER. We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty U.S. Dollar or, they… — Donald J. Trump (@realDonaldTrump) November 30, 2024 Naturally, this has slowed China's progress toward its goals. There has been no serious movement toward de-dollarization or the uptake of the digital yuan. India has signed deals with the U.S. and the United Kingdom and resumed talks with the European Union and Israel. Meanwhile, China's economy is showing some signs of stress. With all of this, it's little surprise that China is unhappy with its fellow BRICS members, and thus, it shouldn't be surprising that Xi has sent a silent message with his absence at the Rio summit. In the great game of global power, not every ultimatum needs to be spoken. Sometimes, the most powerful messages are delivered in silence. Watch | From BRICS to Blockchain: How Global Trade and Digital Currencies Are Evolving title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen="">
South China Morning Post
09-07-2025
- Business
- South China Morning Post
China pushes digital yuan diplomacy amid Global South's dollar dismay
As China moves to accelerate global use of the digital yuan, particularly in cross-border trade along Belt and Road Initiative countries, the push is being interpreted as part of Beijing's broader ambition to rewire the architecture of global finance. Advertisement With international finance increasingly fragmented amid trade wars and sanctions, Chinese officials argue that dollar-based systems backed by the Society for Worldwide Interbank Financial Telecommunication (Swift) are vulnerable to 'weaponisation' China's plan to push its central bank-backed digital currency , also known as e-CNY, comes amid receding Western influence in some parts of the Global South and signals Beijing's focus on nurturing economic ties and a more ideologically neutral, tech-enabled financial order. Chinese officials have begun to discuss the e-CNY in strategic terms. Last month, People's Bank of China Governor Pan Gongsheng called for a 'multipolar' monetary system and announced plans for an international e-CNY operations centre in Shanghai. This comes as US tariffs fuel interest in non-dollar assets and a more internationalised yuan. Beijing has signed digital currency agreements with central banks and begun cross-border experiments with state-run banks in other countries. Increasingly, the e-CNY is being seen as a foreign policy tool to re-establish trade on Chinese digital infrastructure. Advertisement
The Independent
27-06-2025
- Business
- The Independent
Nation set to further advance financial opening-up
China will further advance the opening-up of its financial sector and capital markets, with Shanghai spearheading the efforts, a move that will bring fresh opportunities for collaboration in an increasingly fragmented international financial system, officials and experts said. At the 2025 Lujiazui Forum held in Shanghai, China's top financial regulators unveiled a raft of new opening-up measures on 18 June, including setting up an international operation centre for the digital yuan, or e-CNY, widening foreign institutions' access to financial business pilot programmes and improving the qualified foreign institutional investor, or QFII, programme to facilitate overseas investment. 'We are committed to aligning China's financial regulations with high-standard international economic and trade agreements, exploring broader and deeper areas of opening-up,' said Li Yunze, head of the National Financial Regulatory Administration. Li said that China will leverage successful practices from free trade zones and ports, supporting the greater participation of foreign institutions in financial business pilot programmes. Wu Qing, chairman of the China Securities Regulatory Commission, said the country will soon optimise the QFII programme — which facilitates overseas institutions' investments in financial markets — by easing entry requirements and facilitating investment operations. The number of futures and options products available to QFIIs will increase to 100 at an early date. The CSRC announced later that day that starting on 9 October, QFIIs will be allowed to engage in the trading of exchange-traded fund options listed on trading venues for hedging purposes. With regulators swiftly turning pledges into action, Yang Haiping, a researcher at the Shanghai-based SIFL Institute, said that China is demonstrating its commitment to advancing high-standard institutional opening-up at a deeper level, injecting positive momentum into an increasingly uncertain global environment. 'The moves signal a shift in China's high-level institutional financial opening-up — from passively adapting to existing international rules to proactively exploring new practices for high-level openness,' Yang said. Pan Gongsheng, governor of the People's Bank of China, the country's central bank, announced at the forum an innovative measure for establishing an international operation centre in Shanghai for the e-CNY, aimed at advancing the international use of the digital yuan and serving innovation in digital finance. Lou Feipeng, a researcher at the Postal Savings Bank of China, said the centre will create more application scenarios for the e-CNY and improve cross-border payment services, helping the renminbi play a greater role in enhancing the international payment system. Pan also announced another measure conducive to renminbi internationalisation — the development of offshore bonds in Shanghai's free trade zone. The initiative aims to broaden financing channels for Chinese companies expanding globally and for high-quality enterprises participating in the Belt and Road Initiative. Analysts said the move can help position Shanghai as a key hub in the offshore renminbi market. Christopher Hayward, chairman of the policy and resources committee of the City of London Corporation, said that China's greater openness will benefit both the country and the United Kingdom. 'The more that China can open up, the better that will be for the Chinese economy,' Hayward said on the sidelines of the forum. 'China has a great future — one which the UK wants to do business with.' Official data shows the foreign insurers' market share has more than doubled in China, from 4 per cent in 2013 to 9 per cent now, while foreign banks currently account for nearly 20 per cent of China's derivatives market, demonstrating the country's openness to global financial institutions.
South China Morning Post
23-06-2025
- Business
- South China Morning Post
Beijing could use Hong Kong as test bed for yuan-linked stablecoins: Morgan Stanley
China's central bank could use Hong Kong as a sandbox for testing digital payment alternatives to internationalise the yuan, but Beijing's digital currency ambitions face hurdles because of the country's economic challenges, according to Morgan Stanley. Hong Kong has established the world's first regulatory regime for stablecoins – digital tokens that are pegged to a reference asset like a fiat currency – with the law taking effect from August 1. The move positioned Hong Kong as a launch pad for yuan-pegged stablecoins, which could be used as a pilot for real-world cross-border settlement and offered a way to expand the use of the digital yuan internationally, Morgan Stanley analysts led by chief China economist Robin Xing said in a report last week. The sandbox would be supported by Hong Kong's robust offshore yuan liquidity pool, which was estimated at around 1 trillion yuan (US$139 billion). The allure of stablecoins lies in their ability to make cross-border transfers faster and more cost-effective, a feature that multinational companies hope could help streamline their operations, the report said. A yuan-linked stablecoin would be a good option for cross-border settlements, giving the currency a boost on the world stage, the report added. However, making the yuan truly international faces headwinds, the US bank's analysts said.
Yahoo
18-06-2025
- Business
- Yahoo
Trading Day: Markets calm in eye of hurricane
By Jamie McGeever ORLANDO, Florida (Reuters) - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist Key equity, bond, currency and commodity prices mostly ended little changed on Wednesday, as investors digested the fast-moving developments in the Middle East and the Federal Reserve's latest policy decision and guidance. In my column today I explain why the Bank of Japan's cautious approach to reducing its balance sheet will help keep domestic real rates and yields deeply negative, and keep Japanese money overseas. More on that below, but first, a roundup of the main market moves. If you have more time to read, here are a few articles I recommend to help you make sense of what happened in markets today. 1. Early Fed chair nomination could rattle markets 2. Dollar exit could be crowded for some time: Mike Dolan 3. UK inflation slows but oil price jump creates newproblem for Bank of England 4. China talks up digital yuan in push for multi-polarcurrency system 5. Texas Instruments plans $60 billion U.S. investment amidTrump's onshoring push Today's Key Market Moves * Oil prices end a volatile session slightly higher,recovering losses of around 2% earlier in the day. Brent crudesettles at $76.70/bbl, WTI at $75.14/bbl. * Wall Street's three main indices end essentially flat,although the Russell 2000 small cap index rises 0.6%. * U.S. Treasury yields fall 1 basis point or less across thecurve. * The dollar edges higher but only just. The Swiss franc isone of the biggest movers in G10 FX, slipping 0.3% ahead ofThursday's SNB meeting. * Gold fails to scale $3,400/oz for a second day, but thebig mover in precious metals is platinum, leaping 4% to an11-year high of $1,329/oz on continued strong demand from is up around 25% so far this month. Markets calm in eye of hurricane With the Israel-Iran war entering its sixth day, President Donald Trump leaving the world hanging over his next move and Washington's involvement in the conflict, and the Federal Reserve flagging rising 'stagflation' risks, world markets were remarkably calm on Wednesday. At least, they were calm by the end of U.S. trading, regaining their poise after some intra-day turbulence and settling pretty close to where they ended the previous day. In some ways, this was surprising, given the newsflow. Iranian Supreme Leader Ayatollah Ali Khamenei rejected Trump's demand for unconditional surrender, and the U.S. president said his patience had run out. Asked if he had made a decision on whether to join Israel's bombing of Iran, Trump said: "I may do it. I may not do it. I mean, nobody knows what I'm going to do." Later on Wednesday the Fed kept interest rates on hold as expected, but officials' revised economic projections pointed to slower growth and higher inflation and unemployment over the next couple of years. Stagflation. Trump also resumed his verbal attacks on Fed Chair Jerome Powell before the central bank's policy announcement, calling him "stupid" and berating him for not lowering rates like other central banks. On the other hand, there was ultimately little change in the immediate landscape or near-term outlook for investors to price on Wednesday. The situation in the Middle East is extremely tense, but no more so than 24 hours ago. Trump's equivocation may fuel the uncertainty and tension, but also leaves the door open to more benign outcomes. Perhaps. Similarly, Fed officials may think higher inflation risks mean fewer rate cuts are warranted in 2026 and 2027, but they maintained their central forecast of 50 basis points of rate cuts this year. Investors could reassess on Thursday. U.S. markets will be closed for the Juneteenth federal holiday, but markets everywhere else will be open and investors will have a raft of policy decisions from other central banks to digest too, most notably from the Bank of England and Swiss National Bank. The SNB, flirting with negative interest rates again, will be particularly fascinating. Economists expect it to cut rates 25 basis points to zero, and go negative by the end of the year. Traders are attaching a one-in-four chance it cuts half a point on Thursday. As much of the world frets about the price impact of tariffs, Switzerland is fighting deflation. The franc has never been stronger in broad terms, and its safe-haven status could spur even greater appreciation in the weeks and months ahead. BOJ caution could keep Japanese capital overseas The Bank of Japan is taking a more cautious approach to reducing its balance sheet, meaning Japanese capital invested overseas is less likely to be coming home anytime soon. In the face of heightened economic uncertainty and recent volatility at the long end of the Japanese Government Bond curve, the BOJ announced on Tuesday that it will halve the rate of its balance sheet rundown in fiscal year 2026 to 200 billion yen a quarter. The central bank began gradually shrinking its bloated balance sheet 18 months ago and last August began an even more gradual interest rate-raising cycle, representing a historic shift after years of maintaining ultra-low and even negative nominal rates. All else being equal, this modest tightening would be expected to narrow the yield gap between Japanese and foreign bonds, making JGBs more attractive to domestic and foreign investors while also strengthening the yen. So why hasn't Japanese capital been coming home? In part, because Japan's real interest rates and bond yields remain deeply negative, and the latest BOJ move suggests this is likely to remain the case for the foreseeable future. The prospect of Japanese real returns staying deeply negative is enhanced by current inflation dynamics. Inflation in Japan is the highest in two years by some measures and may prove sticky if Middle East tensions continue to put upward pressure on oil prices. Japan imports around 90% of its energy and almost all of its oil. Japan's yield curve could also potentially flatten from its recent historically steep levels if the BOJ's decision caps or lowers long-end yields. And the curve will flatten further if the BOJ continues to 'normalize' interest rates - something BOJ Governor Kazuo Ueda insists is still on the table, although markets think the central bank is on hold until next year. MARKET MUSCLE Either way, a flatter yield curve won't be particularly appealing to Japanese investors who may be considering pulling money out of U.S. or European markets. And there is a lot of money to repatriate, meaning even marginal shifts in Japanese investors' positioning could be meaningful. While Japan is no longer the world's largest creditor nation, having recently lost the crown to Germany after holding it for more than three decades, it still has plenty of financial muscle with a net $3.5 trillion in overseas stocks and bonds, the highest total ever. Analysts at Deutsche Bank estimate that Japanese life insurers and pension funds hold more than $2 trillion in foreign assets, around 30% of their total assets. What would prompt Japanese investors to repatriate? In a deep dive on the topic last month, JP Morgan analysts said several stars would have to align, namely a sustainable rise in long-term Japanese interest rates, an improvement in the country's public finances, and steady yen appreciation against the dollar. That's a tall order. But if this were to materialize, and banks and other depositary institutions reverted to pre-'Abenomics' asset allocation ratios of 82% domestic bonds and 13% foreign securities, repatriation flows from these institutions alone could amount to as much as 70 trillion yen. That's just under $500 billion at current exchange rates. That's not JPMorgan's base case though, certainly not in the near term. But over the long term, they think some reversal of the flow of capital from JGBs into U.S. bonds over the last decade or more is "plausible". The BOJ's decision on Tuesday probably makes the prospect of any significant capital shift less plausible, though, at least for now. What could move markets tomorrow? * Israel-Iran conflict * Australia unemployment (May) * Philippines interest rate decision * Taiwan rate decision * Bank of England rate decision * Swiss National Bank rate decision * Norges Bank rate decision * Turkey rate decision * European Central Bank officials speak at various events -board member Claudia Buch, Governing Council member FrancoisVilleroy de Galhau, and Vice President Luis de Guindos * U.S. markets closed for federal holiday Want to receive Trading Day in your inbox every weekday morning? Sign up for my newsletter here. Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias. (By Jamie McGeever; Editing by Nia Williams) Sign in to access your portfolio
