Who would bet actual money on tea leaves & read between the lines speculation (besides speculators, i guess)?
Brad Setser, who’s a go to source about China’s role in global economics, has a good rundown of the proposal (link in signature). As to the SDRs, they could be a means of increasing IMF reserves while allowing China to rid itself of some of its dollar exposure. Those increased reserves could help to solidify emerging markets which would be good for the US too. It’s a win-win-win, except for currency traders spooked by China diversifying into an SDR-backed bond. That seems like an overreaction to me, especially since dollars make up part of the currency basket underlying SDRs. What do I know about trading in currencies, though? Regarding the wisdom of the dollar’s central place in Asian economies, Setser’s money quote: A world where key Asian economies add ever growing sums to its already large dollar reserves because they feel compelled to maintain large current account surpluses and huge reserve stockpiles ultimately doesn’t serve the United States’ interests; as Martin Wolf notes, it
