CENTRAL BANKS SHRINK THEIR DOLLAR RESERVES

Central banks around the world have pared back the amount of dollars they hold, reducing the buck’s share of worldwide foreign currency reserves to 59 percent in December, the lowest level since 1995, the International Monetary Fund reported.

The figure equates to a 1.5-percent decline in 2020’s fourth quarter.

The banks have increased their holdings of euros and the Japanese yen as well as currencies of other countries, the Wall Street Journal reported.

The WSJ Dollar Index slipped 0.25 percent on 6 April, its fourth decline in five trading sessions.

The index is down 8 percent year over year.

“Several structural trends skew the medium-term dollar outlook in a negative direction, including the widening U.S. trade deficit, China’s financial opening, and the European Union’s effort to create a common bond market for the region,” Zach Pandl, Goldman Sachs’ chief of foreign currency research, said in a WSJ article.

The bank predicts the dollar will weaken slightly through 2021 as the global economy improves and investors seek higher rates of return elsewhere.

However, rising interest rates, president Joe Biden’s ongoing spending programs, and strong U.S. economic recovery could buoy the buck, others say.

“The share of dollars as a global reserve currency may improve over the coming quarters if the dollar stays strong, which it may, considering the larger yield pick-up you get for holding U.S. assets versus most European ones,” Tai Wong, who trades metals derivatives at the Bank of Montreal, told the WSJ.

TREND FORECAST: Since the U.S. economy is projected to grow stronger than most other nations, the dollar may not fall as fast as we originally projected. However, as the U.S. debt load continues to expand, and the Biden Bounce runs out of economic steam, Washington and the Federal Reserve will take additional measures to artificially pump up the economy, which will, in turn, put further downward pressure on the dollar. 

And while the yuan now accounts for less than 3 percent of global transactions vs. the dollar at 38 percent, with China estimated to overtakes the United States as the world’s largest economy by 2028, it will ultimately become the global currency of choice. 

3 Comments
  1. harlow53 3 weeks ago

    The risk of crypt currencies and Globalism and Central Bankster frauds:

    THE GIZA DEATH STAR
    Home of the Giza Community and Dr. Joseph P. Farrell
    Babylon’s Bankers
    WOOPS… BETTER CHECK THE EXPIRATION DATE…
    25 Comments / Babylon’s Banksters / By Joseph P. Farrell
    For quite some time I and others have been trying to warn about such people as Mr. Globaloney, Mr. Central Bankster, Ernst Stavro Klaus von Blohschwab of the World Economic Fleecing …er… World Economic Forum and their push for digital “currencies” and so on. Among our concerns have been the following: (1) no cyber-system is ultimately secure; (2) digital currencies are a single point of failure, as they are potentially vulnerable to cyber attacks such as (a) hacking (or cyber warfare), (b) catastrophic hardware failure due to such causes as electro-magnetic pulse, actual physical sabotage, or power outages, and so on, and (3) such “currencies” are when coupled to a system of “social credit” not currencies at all, but corporate coupons whose “value” can be adjusted at the whim of Mr. Central Bankster, and so on.

    Well, hold on to your hats, because K.B. spotted the following story and passed it along (a big thank you for doing so!), and wait until you read what it says:

    https://www.zerohedge.com/crypto/chinas-digital-yuan-comes-expiration-date

    In case you missed it, here it is:

    To be sure, none of this is actually new as we have discussed all these nuances of the digital yuan before. What is now, is this blurb in the WSJ article:

    The money itself is programmable. Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start.
    And there you have it: the Keynesian wet dream to boost the velocity of mean finally comes true. For the past decade we have joked that it is only a matter of time before central banks slap on an expiration date on every monetary unit in circulation…

    … to offset the creeping petrification of the monetary system, where negative rates have sparked even more saving and not spending as central banks had intended…
    Why, this is such a niftily stupid idea that only Mr. Globaloney and Mr. Central Bankster could think of it: what better way of preventing people from actually being able to save money than to put an expiration date on it!? Now, my mother was an assiduous coupon-clipper, and by “coupon” I mean the kind that used to come in magazines for a certain amount of money off the retail price of a particular product, not the kind of coupon that comes on a bond, whether corporate or sovereign, though with this news, that distinction appears to be quite blurred. Indeed, as the article itself details, the trial run for this nonsense meant people had to spend their corporate yuan-coupons in certain designated stores (fancy that!) rather than, as with ordinary and real currency, being able to spend it anywhere.

    And with the precedent established of only being able to spend such “currency” in particular stores (which presumably specialize in certain types of retail products), one can envision the extension of the “coupon-‘currency'” to “soap and toiletries yuans,” “automobile yuans,” “travel yuans”… you name it. And of course, “currency” only spendable at certain places on certain types of things isn’t currency either. It’s a coupon.

    In any case, this little bit of news all but makes the point I and others like Catherine Austin Fitts have been trying to make: digital currency is not a currency at all, it’s a corporate coupon, and like all coupons, it comes with an expiration date. Currencies do not. But patience, give them time, pretty soon they’ll think of that too. Want to get rid of good old fashioned cash? Just mint it with a ridiculously short expiration date, and drive people into the longer expiration date digital “currencies”.

    Of course, that won’t work either, and most of us know why

  2. lvblasiotti 3 weeks ago

    harlow53: EXCELLENT POINTS. This proposed U.S. government controlled economy will eventually fall flat on its face. History is not on it’s side. Too many people are being bamboozled by China’s supposedly successful controlled economy. History is not on their side. Whenever freedom is taken away by governments then failure is guaranteed. People think they know the results of communism (government controlled economy) as they were taught by the academics and their BS misleading books. If one were fortunate enough to have visited occupied East Berlin even as late as 1987 they would profoundly understand the failure of GOVERNMENT CONTROLLED systems. Store shelves empty, long lines waiting to buy what few products existed for sale, wait for up to 20-30 minutes to be given a menu in a restaurant, very little food available for purchase and all of this in the Proud Showcase of communism to the West: East Berlin. When ever government tells its citizens what to buy and how much and where, etc. collapse is guaranteed. It may take a few years but it will happen. It took 80 years for Russian communism to collapse where one was lucky to get toilet paper. It would have collapsed prior to 80 years if there was not a black market where people could buy and sell under cover. The black market kept Russia alive and the communists party officials knew it so they ignored it and did not disrupt its functioning. China will prosper for a while but eventually it government control will be history. Supposedly, looks good now but for how long. People today in the U.S. have been drinking the Kool Aide and believe all the BS that the cabal has been feeding them but eventually they will fall into the tyrannical trap that is being set for them (for all of U.S.). Misled and mis-educated by the evil cabal who even want to control when you go to the bathroom. These people are sick…sick…sick. Mis-educated. These educated jokers cannot define male and female any longer. Go to some primitive society in South America and they have no problem distinguishing a newborn male from a female. We are in big trouble thanks to the explosion of corruption throughout our society.
    The solution: Serious and fervent Prayer, Repentance and a return to worshiping God our Creator.

    • lvblasiotti 3 weeks ago

      I forgot to mention that when I visited East Berlin on several occasions I rarely saw any obese people. I wonder what the diabetes statistics were prior to the tearing down of the Berlin Wall on or about 1989?
      The USA needs to stop drinking the Kool Aide before we get mental diabetes.

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