Worldwide, the central bankers are already in a currency war, so this policy statement should not come as a surprise.
Noteworthy is the fact it was publicly and bluntly stated.
Highly indebted nations weaken the value of their currency by cutting interest rates down to zero to gain some trade advantages and pay less debt service on their bonds.
Until recently, the currency war has been mostly fought between the Dollar and Euro.
But from now on, the BRICS economies will join in, too. Currency debasement turns into “war” as soon as multiple countries are involved.
Japan’s throws itself into the fight recently
“China is fully prepared,” Yi was quoted saying in the China Daily.
“In terms of both monetary policies and other mechanism arrangement, China will take into full account the quantitative easing policies implemented by central banks of foreign countries.”
Currency war escalating?
Yi’s statements raise more questions than answers.
“Fully prepared” can only mean: printing money and accelerating central banks money growth rate.
The US and Japan are already conducting QE (Quantitative Easing) with no clearly formulated exit strategy.
The statements by Yi perhaps may be an indication the already ongoing war is about to escalate.Source: Forbes – “China Official Says Ready To Battle Weak Dollar, Euro” Source: Global Economic Analysis – “China “Fully Prepared for Currency War” Says China’s Central Bank Deputy Governor”
- China Central Bank Says It Is “Fully Prepared For Looming Currency War” (sgtreport.com)
- China ‘fully prepared’ for currency war (telegraph.co.uk)
- What could derail a middle class China? (chinadailymail.com)
Categories: Finance & Economy