But, in my opinions: 1) the supposed trilemma is questionable, one reason it actually about trade-offs, not absolute exclusions. While a full full blast of all three might create unsustainable tensions, in practice, in some ways or others, all three, or maybe even any, are probably not fully there anyways and partial measures or compromises allow for varying degrees of each. For example, countries can adopt managed exchange rate regimes (like crawling pegs or currency bands) that offer stability without being full fixed. Also, capital flow management, such as forms of capital controls, capital inhibitors, or macroprudential regulations, permit partial openness without sacrificing all monetary policy autonomy. Amongst other things.
And more importantly, 2) in my view the biggest threat to King Dollar is the same biggest threat to the highly globally extractive planetary financial-economic system in general: a wave of sudden -- not necessarily violent -- true and real political change in the so called developing nations
Hi Mike, thanks for your comment but you seem to be referring to another post, this one, "There Won't Be Any BRICS Common Currency. And It Is A Good Thing" right? Your analysis is legitimate and interesting and let the author respond, but you need to post the comment in the right section. Thank you!
Liu Yifan raises a very important question. How can China support de-dollarization while the currency of Hong Kong - China’s offshore financial hub and entrepot - is pegged to the US dollar? I live in Hong Kong and remember that in colonial times the city was described as “a borrowed place living on borrowed time.” After its return to the motherland in 1997 HK is no longer a borrowed place, but the sense of living on borrowed time hasn't completely disappeared, people are still anxious about the fate of its currency. We try to hedge the risk with dual currency deposits and savings, in yuan and HK dollars, but we fear that is not a long-term solution. As i applaude efforts to reduce the use of the US dollar in international trade, i wonder what the impact on the HK dollar is going to be. And i am not the only one. As to the rise of alternative payment systems to bypass Western sanctions, they are still unavailable to the general public. When I travel to Russia i can't use my Union Pay card because it is issued by a HK bank that abides by the sanctions. It's a negligible problem because i am not a big spender and cash is accepted everywhere i go, but it might be a deterrent for some people. Those who are doing business with Russia face bigger obstacles when it comes to making and receiving payments. However, these obstacles are not insurmountable, Russian-Hong Kong trade is steadily growing.
China must keep capital controls especially now as the money vultures are eagerly looking for any crack they can slip into. It's nice to consider that trading in national currencies could obviate the necessity of any kind of SWIFT-like system. After 75 years of operation, the world monetary/economic system will not be circumvented easily or quickly. New thinking is desperately needed to get outside the box. This will be the biggest shift of all.
Well written and interesting!
But, in my opinions: 1) the supposed trilemma is questionable, one reason it actually about trade-offs, not absolute exclusions. While a full full blast of all three might create unsustainable tensions, in practice, in some ways or others, all three, or maybe even any, are probably not fully there anyways and partial measures or compromises allow for varying degrees of each. For example, countries can adopt managed exchange rate regimes (like crawling pegs or currency bands) that offer stability without being full fixed. Also, capital flow management, such as forms of capital controls, capital inhibitors, or macroprudential regulations, permit partial openness without sacrificing all monetary policy autonomy. Amongst other things.
And more importantly, 2) in my view the biggest threat to King Dollar is the same biggest threat to the highly globally extractive planetary financial-economic system in general: a wave of sudden -- not necessarily violent -- true and real political change in the so called developing nations
Hi Mike, thanks for your comment but you seem to be referring to another post, this one, "There Won't Be Any BRICS Common Currency. And It Is A Good Thing" right? Your analysis is legitimate and interesting and let the author respond, but you need to post the comment in the right section. Thank you!
Liu Yifan raises a very important question. How can China support de-dollarization while the currency of Hong Kong - China’s offshore financial hub and entrepot - is pegged to the US dollar? I live in Hong Kong and remember that in colonial times the city was described as “a borrowed place living on borrowed time.” After its return to the motherland in 1997 HK is no longer a borrowed place, but the sense of living on borrowed time hasn't completely disappeared, people are still anxious about the fate of its currency. We try to hedge the risk with dual currency deposits and savings, in yuan and HK dollars, but we fear that is not a long-term solution. As i applaude efforts to reduce the use of the US dollar in international trade, i wonder what the impact on the HK dollar is going to be. And i am not the only one. As to the rise of alternative payment systems to bypass Western sanctions, they are still unavailable to the general public. When I travel to Russia i can't use my Union Pay card because it is issued by a HK bank that abides by the sanctions. It's a negligible problem because i am not a big spender and cash is accepted everywhere i go, but it might be a deterrent for some people. Those who are doing business with Russia face bigger obstacles when it comes to making and receiving payments. However, these obstacles are not insurmountable, Russian-Hong Kong trade is steadily growing.
China must keep capital controls especially now as the money vultures are eagerly looking for any crack they can slip into. It's nice to consider that trading in national currencies could obviate the necessity of any kind of SWIFT-like system. After 75 years of operation, the world monetary/economic system will not be circumvented easily or quickly. New thinking is desperately needed to get outside the box. This will be the biggest shift of all.