[Peace-discuss] A Fistful of RMB

[E. Wayne Johnson]

"...And don't let anybody make you think that God chose America as his 
divine messianic force to be a sort of policeman of the whole world. God 
has a way of standing before the nations with judgment and it seems that 
I can hear God saying to America, "You are too arrogant. /If you don't 
change your ways I will rise up and break the backbone of your power, 
and I will place it in the hands of a nation that doesn't even know my 
name./ Be still and know that _I'm_ God."

"You never give me your money, you only give me your funny paper..."

EX-pat "Simon Black" writes more...

*

Opening a renminbi savings account in the US

January 12, 2011
Santiago, Chile

In its latest step to make the renminbi a competing global reserve 
currency, China's predominantly state-owned Bank of China will now let 
individuals open renminbi savings accounts... in the United States.

Effective immediately, BOC's US individual customers can now open a 
renminbi denominated savings account with a $500 equivalent minimum 
balance. The bank also offers certificates of deposit in 6-month and 
1-year terms with a minimum of $1,000 equivalent.

The account opening procedures are simple-- there is an application 
form, a W-9 tax form, and a signature card.  Applicants are also 
required to provide a government-issued ID and one other form of 
identification such as a credit card, employee ID card, insurance card, 
etc. You do have to show up in person.

Businesses can also open renminbi accounts with a $5,000 equivalent 
minimum and requisite entity paperwork like Articles of Organization, etc.

At this time, renminbi cash cannot be withdrawn from the account, though 
I would expect this to change eventually. The bank does provide currency 
exchange services between dollars and renminbi at its Chinatown branch 
in New York; current limits are up to $4,000 per day, and $20,000 per year.

China doesn't do anything overnight, and I believe the government is 
executing a long-term plan to make Shanghai the world's leading 
financial center... and as a part of that plan, for the renminbi (or 
some derivative) to become a fully-convertible competing global reserve 
currency.

We're already seeing significant signs of this-- many sovereign nations 
are holding renminbi in reserve instead of just dollars, and Chinese 
cross border settlement is now frequently being transacted in renminbi 
instead of dollars because of new clearing and settlement platforms that 
have been established in Hong Kong.

Just last week I wrote about a new renminbi denominated gold contract 
<http://www.sovereignman.com/expat/when-will-the-renminbi-overtake-the-dollar/> 
that will trade in Hong Kong, as well as the recent World Bank renminbi 
bond issuance.

Bank of China's move in the United States is just the latest step in 
this long-term process to loosen exchange controls and achieve full 
convertibility of the renminbi, and I think we'll see even more steps 
like this in the coming months and years.

More specifically, I imagine that a similar exchange platform will be 
unveiled in Europe for euro and pound conversion into renminbi; that 
further renminbi-denominated contracts in Asian staple commodities like 
rice will hit the Hong Kong exchange; and that many of these contracts 
will move beyond Hong Kong to other exchanges.

Singapore is the most likely candidate to absorb renminbi contracts; the 
Singapore exchange (SGX) already operates global depository share 
trading of mainland Chinese companies, and it always does its best to 
stay on the cutting edge of finance.

After Singapore, I think we'll see renminbi contracts spreading across 
the region into places like Australia (which has strong economic ties to 
China) and Thailand (an agricultural commodities powerhouse).

Several years from now, the entire world will know that the baton has 
been passed on the day that the US Treasury Department holds a bond 
auction denominated in renminbi, or the day when a bank wire transfer 
from Bangkok to Boston passes through a corresponding bank in Shanghai.

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