Get ready America… China is preparing to fully challenge the dollar by October

An interesting, but extremely important piece of news fell through the cracks earlier this week, that has the potential to be one of the most powerful attacks on the dollar’s reserve currency status since 1973.  And it appears to be happening using the West’s own mechanism against them.

On Aug. 1, China announced that around the 1st of October they will be internationalizing the IMF’s Special Drawing Right’s (SDR) currency for global use in trade, thus placing the currency basket in play for nations to use instead of the dollar.

Now in August of 2016, we are very close to the first SDR issuance of the private sector since the 1980s.

Opinion pieces in the media and speculation by informed sources prepared us for the launch of an instrument most people don’t know about earlier in 2016. Then the International Monetary Fund (IMF) itself published a paper discussing the use of private sector SDRs in July, and a Chinese central bank official confirmed an international development organization would soon issue SDR bonds in China, according to Chinese media Caixin.

Caixin now confirmed which organization exactly will issue the bonds and when: The World Bank and the China Development Bank will issue private sector or “M” SDR in August.

The so-called SDR are an IMF construct of actual currencies, right now the euro, yen, dollar, and pound. It made news last year when the Chinese renminbi was also admitted, although it won’t formally be part of the basket until Oct. 1 of this year.

How much? Nikkei Asian Review reports the volume will be between $300 and $800 million and some Japanese banks are interested in taking up a stake. According to Nikkei some other Chinese banks are also planning to issue SDR bonds. One of them could be the Industrial and Commercial Bank of China (ICBC) according to Chinese website Yicai.com.

The IMF experimented with these M-SDRs in the 1970s and 1980s when banks had SDR 5-7 billion in deposits and companies had issued SDR 563 million in bonds. A paltry amount, but the concept worked in practice.

The G20 finance ministers confirmed they will push this issue, despite private sector reluctance to use these instruments. In their communiqué released after their meeting in China on July 24:
“We support examination of the broader use of the SDR, such as broader publication of accounts and statistics in the SDR and the potential issuance of SDR-denominated bonds, as a way to enhance resilience [of the financial system].”

They are following the advice of governor of the People’s Bank of China (PBOC), Zhou Xiaochuan, although a bit late. Already in 2009 he called for nothing less than a new world reserve currency.

“Special consideration should be given to giving the SDR a greater role. The SDR has the features and potential to act as a super-sovereign reserve currency,” wrote Zhou.

— Epoch TImes

What is most extraordinary about this is that control over the M SDR will come from Chinese authority, and with the blessings of Japan, Europe, and members of the G20.  And this move will also provide China the initial boost it needs to act as a second caretaker of the global reserve currency system, and bring them one step closer to implementing their end game goal of a gold backed trade program.

In addition to this move, China will announce the results of a new audit for their gold reserves, which is a key part in the IMF allowing China to become the gatekeeper for SDR internationalization.  And dependent upon how much they declare their reserves to be, it could be a shock to the system for U.S. hegemony over the gold price, and open the door for Shanghai to wrest full control over the pricing of precious metals.

How this will affect the upcoming U.S. elections is unclear, but it is no coincidence that these two events will be occurring in October, and at the time where a change in power for the U.S. empire is taking place.  Yet either way, the days of a singular polar reserve currency may soon be at an end, and how quickly its use expands beyond just the G20 will only be a matter of time.

13 comments

  1. Last year it was estimated by many wise souls that Saudi Arabia had several years of cash left over before they went broke. Uh Oh it came to light within months, and the kingdom is falling apart at breakneck speed. As you ask in the last line of your article, "how long" or "how quickly"…? I could be wrong, but I think it unfolds quickly much more quickly than many expect. As you say buddy, time will tell, I suspect it to be short time.

    Wolf Gray

  2. This issue has not fallen through the cracks at all. Just in the past week I have written 5 articles, citing the Epoch Times and a wide variety of other sources, along with producing two videos on the topic.
    I have also touched on the upcoming meeting of the G20 and will be releasing a piece over the weekend about the true NWO, not the theorized version, but the actual face of the NWO. Hint, they work in conjunction with the IMF and most, if not all, Western Central Banks. Check it out http://thedailycoin.org/tdc-works I have been very busy on this subject.

    1. Definitely Rory, I try to catch your work and interviews all the time.

      And when I refer to ‘falling through the cracks’ Im always implying the mainstream. Cant have real news affect stocks now can they? 😀

  3. The IMF in Washington will not manage the daily SDR conversions but will be done by the Bank of International Settlements , (BIS), in Geneva, Switzerland. China and Russia recently deposited large amounts of gold with the IMF and received SDRs in exchange. All countries have now SDRs as part of their official reserves and this is the reason central banks have been buying gold to exchange for SDRs. On 10/1/2016 when China is officially added to the basket backing the SDR countries around the planet can exchange a portion of their dollars, treasuries and government debt to the IMF for SDRs. China wants the IMF to speed up the process and not wait until October as they chair the board that oversees the IMF. The BRICSA countries will use the SDR to settle trade with the west and will use each other currencies to settle trade with the each other. Where they have currency swap agreements, China will settle trade with each other country’s currencies. The list of China’s swap agreements is impressive including Untied Kingdom, Germany, South Korea, most Asian countries, Switzerland, Argentina, Canada, New Zealand, Australia, the European Union, Turkey, Hungary, of course all of the BRICSA countries to name just a few. London has announced it will issue RMB denominated bonds. This was all decided back in 2010 after the financial crisis that wall street created and it was voted on and approved by all IMF members except the US. This is all part of the international bankers plan, (not including the US banks), of going to a uni-polar dollar denominated world to a multi-polar one where the SDR and other currencies will be used to settle trade. This has been all happening behind the scenes for the last 6 years. After the agreement the DOJ went after the international banks with criminal prosecution and fines just because the dollar was used in transaction. The international banks are in a live or die battle with wall street and the neocons in Washington as they have lost billions in defaulted loans where the US has destroyed countries either economically, militarily, color revolutions or all of the above. Countries like Iraq, Afghanistan, Syria, Ukraine, Egypt, Libya, Yemen, Venezuela, Argentina, ,Honduras, to name a few. These international bankers are the ones who are really backing Donald Trump as the world has had enough. It is amazing that this is all common knowledge outside of the US but very few people in the states are aware what is really going on. The recent posts I have seen act like this is "news" when in fact what is happening has all been planned back in 2010!

  4. Putin will be cool and won’t take the bait; China will push for financial reset, Europe will flip to Russia, China and Iran; the Globalist Neocons will say you better cut us decent deal or we’ll blow up the whole damn thing up.

    USA will either 1) Rise like a phoenix as Russia did from the 80-90s collapse and make a tremendous resurgence of prosperity in the next 20 years; or 2) Roll over and be a sheep for the slaughter. Nationalism, college football and option #1 will save America!

    I lived/worked in the USSR from 1988-1991, as an nuclear missile inspector on the Intermediate Nuclear Forces (INF) treaty, 800 miles east of Moscow at the secret Votkinsk Machine Building plant, inspecting SS-25 ICBMs; we worked/negotiated/drank with the Russians…they still remembered the Great Patriotic War and how USA helped them defeat Hitler; that bond was still there…now they call Obama Schmoe (homo); we need to show our Clint Eastwood "bad ass/righteous dude" side, and they will team up with USA again.

    The Soviets (Tavarish), as we were told to call them back then, were poor as dirt, but they had their families/pride/nationalism and a will to survive….USA needs to persevere through our own Stalingrad and economic collapse…get tough and make the Big Come Back!

  5. This article in the Economist is from last December

    Reserve-currency status might make for a weaker yuan

    Dec 5th 2015 | From the print edition

    PASSING through the Suez Canal became easier earlier this year, thanks to an expansion completed in August. Now it is about to become a little bit more complicated. Transit fees for the canal are denominated in Special Drawing Rights, a basket of currencies used by the International Monetary Fund (IMF) as its unit of account. This week the IMF decided to include the yuan in the basket from next year, joining the dollar, the euro, the pound and the yen.

    If lots of things were priced in SDRs, the IMF’s decision would have forced companies around the world to buy yuan-denominated assets as soon as possible, to hedge their exposure. That would have prompted China’s currency to strengthen dramatically. But few goods or services are priced in SDRs. Instead, admission to the currency club is significant mainly for its symbolism: the IMF is lending its imprimatur to the yuan as a reserve currency—a safe, liquid asset in which governments can park their wealth. Indeed, far from setting off a groundswell of demand for the yuan, the IMF’s decision may pave the way for its depreciation.

    The reason is that the People’s Bank of China (PBOC) will now find itself under more pressure to manage the yuan as central banks in most rich economies do their currencies—by letting market forces determine their value. In bringing the yuan into the SDR, the IMF had to determine that it is “freely usable”. Before coming to this decision, the IMF asked China to make changes to its currency regime.

    Most importantly, China has now tied the yuan’s exchange rate at the start of daily trading to the previous day’s close; in the past the starting quote was in effect set at the whim of the PBOC, often creating a big gap with the value at which it last traded. It was the elimination of this gap that lay behind the yuan’s 2% devaluation in August, a move that rattled global markets. Though the yuan is still far from being a free-floating currency—the central bank has intervened since August to prop it up—the cost of such intervention is now higher. The PBOC must spend real money during the trading day to guide the yuan to its desired level.

    Inclusion in the SDR will only deepen the expectations that China will let market forces decide the yuan’s exchange rate. The point of the SDR is to weave disparate currencies together into a single, diversified unit; some have suggested, for example, that commodities be quoted in SDRs to reduce the volatility of pricing them in dollars. But if China maintains its de facto peg to the dollar, the result of adding the yuan to the SDR will be to boost the dollar’s weight in the basket, defeating the point. …cont’d

    http://www.economist.com/news/business-and-finance/21679341-its-new-status-might-make-weaker-yuan-chinese-renminbi-joins-imfs

  6. Pingback: SIMAD UNIVERSITY

Leave a Reply

Your email address will not be published. Required fields are marked *