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James Leitner's avatar

i would think that as reserves are held for many reasons one of which is to protect the ability to import required commodities, part of reserve reallocation will go into commodity accumulation. so i would expect that over the next decade reserve managers will start maintaining commodty pools domestically which are not subject to being compromised by other governments.

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Godfree Roberts's avatar

SDRs, Special Drawing Rights, are Keynes' Bancor reincarnated: a synthetic currency whose value is derived from a basket of trading currencies and commodities as publicly traded on a daily basis.

Extremely stable. Politically neutral. Hard to influence. Every participating central bank will get a board seat at the table and a vote.

China made perfectly clear what it wanted in 2009, after the Global Financial Crisis, when Zhou Xiaochuan, Governor of the Peoples Bank of China, PBOC, announced,

The world needs an international reserve currency that is disconnected from individual nations and able to remain stable in the long run, removing the inherent deficiencies caused by using credit-based national currencies.”

Zhou proposed Special Drawing Rights, SDRs valued against a basket of trading currencies, and Nobelists C. Fred Bergsten, Robert Mundell, and Joseph Stieglitz agreed, “The creation of a global currency would restore a needed coherence to the international monetary system, give the IMF a function that would help it to promote stability and be a catalyst for international harmony".

What happened next:

2009: PBOC says, "We want SDRs"

2012: Beijing values the RMB in SDRs

2014: IMF makes its first SDR loan.

2016: World Bank makes its first SDR bond

2017: StanChart Bank issues its first commercial SDR note

2019: All central banks restate their reserves in SDRs

2022: Russia, the EUEU, and China will announce the new reserve currency Apr 1.

Expect a synthetic currency whose value derives from a global, publicly traded basket of currencies and commodities.

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