‘The next deal on monetary power on this planet: Summer 2022’ – Policy

Special drawing rights (SDR) or special drawing rights are a type of international currency. It is managed by the International Monetary Fund (IMF), the main specialized body of the United Nations. After the expiration of the Bretton Woods Agreement in August 1971, special drawing rights were introduced to provide some guidance on monetary affairs in this world. In the early stages, the value of the SDR was related to the basket of major currencies: the US dollar, the Japanese yen, the German mark, the French franc and the British pound.

The U.S. currency was leading by 39 to 42 percent in the basket. A little further on the Deutsche mark was 19 to 21 percent. Basket mixing was limited to five of the seven countries in the Group of Seven (G7). The Italian lira and the Canadian dollar have never been part of the SDR basket. Since 1999, the euro mark and the French franc have changed 32 percent or two of the old European currencies.

Every five years, the basket must be revised based on two parameters: a country’s share in world trade and the global use of the national currency in international financial transactions.

The last offering of the SDR basket of four currencies (dollar, pound, yen and euro) was in 2011. The dollar was 41.9 percent (2.1 percent lower than 2006), the euro 37.3 percent (+ 3.4%), the pound 11.3 percent (+ 0.3%) and the yen 9.4 percent (-1.6%). In 2016, controversy arose over allowing the Chinese yuan into the basket. This was eventually allowed due to the large role of the People’s Republic of China in world trade. With the economic zones of Macau and Hong Kong, the communist country accounts for a larger share of world trade than the United States (11.7% in the US and 13.3% in China). As for the second parameter, there is no argument to allow China. The yuan cannot be changed independently, China is a state-led economy and the position of the Chinese National Bank is comparable to that of a branch of the Communist Party.

While ECP leader Lagarde was still the boss of the International Monetary Fund, the 2016 split was a fall for the euro. The share of the SDR basket fell by 41.73 per cent (-0.17 per cent compared to 2011), the euro by 30.93 per cent (-6.47 per cent), the yuan by 10.92 per cent and the yen by 8.33 per cent (-1.07 per cent). ) And the pound is still good at 8.09 per cent (-3.21%).

The next deal on monetary power on this planet: Summer 2022.

New members?

Who else can join? Look for a list of countries that are part of the G7, countries that have a significant share in world trade, and countries that have a large financial center that uses the currency globally. Only Canada is in the first group. But is the Canadian dollar important to be a part of the basket? Canada is the eleventh country in world trade. South Korea ranks eighth in world trade, followed by Singapore at twelve and India at thirteenth. The latter country, in particular, has an enormous population, but not an overly solid currency reputation. This leaves Switzerland with a large financial center, but the SDR basket is difficult to sell, including a country of 10 million people.

No countries will be removed from the basket. The United Kingdom has London as its financial and gold hub, veto the UN Security Council and a permanent member of the International Organization for Migration.

The discussion will focus on the current distribution of values ​​in the five-member SDR basket. In principle, that redistribution had to continue at this point. But Admin Panel (24 directors, including Penelux) decided to postpone the implementation of the new distribution from October 1, 2021 to August 1, 2022. The main reasons for the ten-month delay in the decision are the fact that the monetary power in this world, the Covid-19 epidemic and the economic markets have not been able to function optimally. The question is whether such a situation will exist in 2022.

The new distribution will examine the status of countries’ currencies and their role in world trade. In addition, the Americans, British and Chinese have conducted a much more effective vaccination campaign than the Eurozone. The economic and budgetary costs of epidemics also appear to be very high in the eurozone. Tensions between the United States and China will also play a role in the new division. In that sense, there is no difference between the Biden administration and the Trump administration. The important question is how much the stock of the Chinese currency will rise in the basket and which currency will pay for it with the fallen stock.

The era of grace comes in the middle of a very important European election period. Germany will vote in September 2021 and the French in May 2022. Following the Lagarde International Monetary Fund, Europe did not select someone from the eurozone, which is not the best move on the old continent. The next deal on monetary power on this planet: Summer 2022.

Special drawing rights (SDR) or special drawing rights are a type of international currency. It is managed by the International Monetary Fund (IMF), the main specialized body of the United Nations. After the expiration of the Bretton Woods Agreement in August 1971, special drawing rights were introduced to provide some guidance on monetary affairs in this world. In the early stages, the value of the SDR was related to the basket of major currencies: the US dollar, the Japanese yen, the German mark, the French franc and the British pound. The U.S. currency was leading by 39 to 42 percent in the basket. A little further on the Deutsche mark was 19 to 21 percent. Basket mixing was limited to five of the seven countries in the Group of Seven (G7). The Italian lira and Canadian dollar have never been part of the SDR basket. Since 1999, the euro mark and the French franc have exchanged 32 percent or two of the old European currencies. Every five years, the basket must be revised based on two parameters: a country’s share in world trade and the global use of the national currency in international financial transactions. Dollar, pound, yen and euro) in 2011. The dollar was the most important currency at 41.9 percent (2.1% lower than in 2006), the euro at 37.4 percent (+ 3.4%), the pound at 11.3 percent (+ 0.3%) and the yen at 9.4 percent (-1.6%). In 2016, controversy arose over allowing the Chinese yuan into the basket. This was eventually allowed due to the large role of the People’s Republic of China in world trade. With the economic zones of Macau and Hong Kong, the communist country accounts for a larger share of world trade than the United States (11.7% in the US and 13.3% in China). As for the second parameter, there is no argument to allow China. The yuan cannot be changed independently, China is a state-led economy and the position of the Chinese National Bank is comparable to that of a branch of the Communist Party. While ECP leader Lagarde was still the boss of the International Monetary Fund, the 2016 split was a fall for the euro. Shares of the SDR basket fell 41.73 percent (-0.17% compared to 2011), the euro 30.93 percent (-6.47%), the yuan a new 10.92 percent and the yen 8.33 percent (-1.07%). ) And the pound is still good at 8.09 per cent (-3.21%). Who else can join? Look for a list of countries that are part of the G7, countries that have a significant share in world trade, and countries that have a large financial center that uses the currency globally. Only Canada is in the first group. But is the Canadian dollar important to be a part of the basket? Canada is the eleventh country in world trade. South Korea ranks eighth in world trade, followed by Singapore at twelve and India at thirteenth. The latter country, in particular, has an enormous population, but not an overly solid currency reputation. This leaves Switzerland with a large financial center, but the SDR basket is difficult to sell, including a country of 10 million people. No countries will be removed from the basket. The UK is a key player in London as its financial and gold hub and as a permanent member of the UN Security Council veto and the International Organization for Migration. Discussions will focus on the distribution of current values ​​in the SDR basket. With five members. In principle, that redistribution had to continue at this point. But the Board of Directors of the International Monetary Fund (24 Directors, including Benelux) decided to postpone the implementation of the new issuance until March 1, 2021 to August 1, 2022. The main reasons for the ten-month delay are the fact that the monetary power in this world is the Covid-19 epidemic and economic markets have not been able to function optimally. The question is whether such a situation will exist in 2022. The new distribution will examine the status of countries’ currencies and their role in world trade. In addition, the Americans, British and Chinese have conducted a much more effective vaccination campaign than the Eurozone. The economic and budgetary costs of epidemics also appear to be very high in the eurozone. Tensions between the United States and China will also play a role in the new division. In that sense, there is no difference between the Biden administration and the Trump administration. The important question is how much the stock of the Chinese currency will rise in the basket and which currency will pay for it with the fallen stock. The era of grace comes in the middle of a very important European election period. Germany will vote in September 2021 and the French in May 2022. Following the Lagarde International Monetary Fund, Europe did not select someone from the eurozone, which is not the best move on the old continent. The next deal on monetary power on this planet: Summer 2022.