Comments on: Beijing debates the yuan Next stop? China Fri, 06 Jul 2012 10:45:14 +0000 hourly 1 By: samuelshen Thu, 30 Dec 2010 08:36:03 +0000 The article is well-written, but there’re some points I feel worth debating about.
The author apparently wants to say: A.China will likely (and should) accelerate interest rate reform –> That would lead to B: more difficult management of the exchange rate–> and thus, C: more tension between PBOC and SAFE.
I have several reservations:
1. Conclusion, C, looks problematic. If SAFE is a function, or part of POBC, how could it conflict with POBC? It’s like saying there’s growing tension between author George Chen and the Chinese People. But George is one of Chinese. Only two sperate entities, such as China and the US, can conflict each other. But you could say SAFE conflicts with other agencies/functions of PBOC, that’s a possibility.
2. The author implies that once yuan becomes fully convertible, SAFE loses its function. That’s dubious. Because one of the central banks’ three functions is to maintain stability of its currency vis other currencies. (the other two objectives being lowering unemployment and controlling inflation). So, as long as a nation has currency, convertible or not, SAFE, or rather POBC, has that function.
3. the last question of the article looks not convincing. All central bankers in the world are politicians. In fact, in my understanding, all government officials are politicians, partly because they make policies to balance people’s conflicting interests. (look at how the Feb makes these money-printing decisions).
My opinions are directed to the article itself, and welcome counter-auguments…