Financial Times – Renminbi Use Surges in Home of US Dollar

Swift Watch Graph on the RMB Payments Value Weight and US Renminbi Payments Value Evolution

Source: With Watch and Financial Times

The Financial Times published an alarming article on ‘Renminbi Use Surges in Home of US Dollar’ that presages a severe impact for the U.S. economy.  Having an active interest in many Digital Advocacy projects in Washington DC, the Renminbi’s displacement of the greenback, is one that stands to be not only a game-changer, but a game ender.

The June 4, 2014 article by journalist James Kynge highlights that “it is the monetary equivalent of what Chairman Mao called “bombarding the headquarters”. China’s renminbi is rapidly displacing the US dollar as a trading currency not only in Asia and Europe but now also in the US home market.””Picture of Financial Times Logo

China’s Global Trade in Renminbi is Projected to Grow from 15% today to 30% by 2015

Debra Lodge, a managing director at HSBC in New York highlights in the article that “by the end of 2015, we think that 30 per cent of (China’s) global trade will be settled in renminbi, up from 13 to 15 per cent now,” said Lodge.

As the mid-term elections approach, much focus remains on the gridlock in Washington DC.  Underneath the surface is the basic notion of accountability – in simple terms, balancing the budget.  Notably, lack of fiscal accountability has eroded the strength of the Dollar and enabled a serious contender to the Dollars as a Reserve currency.  As the Federal Reserve pulls-back from issuing and buying US Treasury Bonds, market forces will return to the bond market.

In a nutshell, the music is about to stop when US Treasuries will have to offer higher interest rates, to compete with potentially, more sound financial instruments (e.g. the Renminbi).  The implications – advocacy projects in Washington DC – no matter whether Democrat or Republican, will be irrelevant.  Deficit spending is not a sustainable strategy when global investors have a viable alternative.

To read the full article on the Financial Time’s web site, click here.

By Nick Mavrick

You can find Nick Mavrick on Google+

Intelligent Response specializes in operationalizing Predictive Analytics and Digital Advocacy projects from start to finish in Washington DC.

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