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SDR's Likely Role... in a Financial Reset

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SDR's Likely Role... in a Financial Reset

China wants in ... but the world seems to be waiting for the USA

 

James Turk-Dollar Will Eventually Go Over the Cliff

= x =

 

"Before year-end: I look for a reversal of some of these moves, such as in Gold."

"And the Chinese may announce their Real holdings of Gold."

SDR’s and the New Bretton Woods – Part Six

 

Consolidation or Collapse, and Conspiracy Theories

 

EXCERPT

there is an organized structure or process attempting to bring rule of law and a balanced system to the international monetary system. This system of change is based on the fundamentals of self-limiting rent seeking elites from large transfers of wealth which only serve to deepen economic recession. We are seeing this system of self-limiting being successfully implemented in countries such as Vietnam, China, Russia, and India, with more to come. It is not a perfect process but it is a process nonetheless.

 

self-limiting-rent-seeking.jpg?w=474

 

This is not China against America. Or some shadowy group against another shadowy group. All the information about this new system is already out in the open and available for all who take an interest in learning about it.

Zhou Xiaochuan of the People’s Bank of China is one of the most vocal members of the international community calling for the implementation of this new SDR system. And a big part of the structure of this new system is the Basel 3 regulations as put forth by the Bank for International Settlements. So it’s no surprise to learn that Zhou Xiaochuan is in fact one of the board members of the Bank for International Settlements. This should put to rest any conspiracy theories about China overthrowing the current banking system.

 

When we hear talk of the Global Currency Reset and the Great Consolidation, what we are reading or hearing is in fact a simplified version of the modifications being slowly implemented in the international monetary system. Though they will in fact benefit greatly from the consolidation and composition process by way of increased physical assets.

As we have covered in previous essays, the Great Consolidation will be the restructuring of sovereign debt into the new SDR system of compositions and allocations. Considering that commodities will make up a large percentage of the SDR compositions, it’s important to manage this sovereign debt as the debt itself will eventually, and in essence already is, undermining the commodity prices which will build a basket of goods used to value the SDR’s themselves.

 

What we’re saying here is that if there is no Great Consolidation (restructuring of sovereign debt through the I.M.F.) than there will be no Global Currency Reset or SDR basket of currencies based on goods and other commodities.

With the new SDR system in place, all the currencies of the world can peg their value to the SDR containing the basket of commodities and other composition weights which we have discussed. With the SDR acting as the reserve currency anchor a fixed exchange rate can be set (or allowed to fluctuate within a band) and the foreign reserves held in dollars will be slowly replaced with SDR reserves.

 

With a large scale substitution of U.S. dollar reserves with SDR reserves, it will create a situation where less exchange rate pressure is exerted on the U.S. dollar as it attempts to restructure its sovereign debt through the very same SDR consolidation system.

 

So why hasn’t the Global Currency Reset and Great Consolidation taken place yet?

Simple, the United States Congress has not passed the legislation required to restructure the Executive Board of the International Monetary Fund. For those who doubt that this is indeed the holdup, a very brief review of the 2010 Code of Reforms themselves should be required. The U.S. holds 17% of the vote on the Executive Board. For any measures to pass the required vote is 85%.

==

> MORE: http://philosophyofmetrics.com/2014/02/18/sdrs-and-the-new-bretton-woods-part-six/comment-page-1/#comment-584

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Special drawing rights / Now: 34.5 mg of Gold?

 

SDR-1985.png

 

Calculation :

 

From Wikipedia, the free encyclopedia

Special drawing rights (XDR - aka: SDR) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). The XDR is not a currency per se. It instead represents a claim to currency held by IMF member countries for which they may be exchanged.[1] As they can only be exchanged for Euro, Japanese yen, pounds sterling, or U.S. dollars,[2] XDRs may actually represent a potential claim on IMF member countries' nongold foreign exchange reserves, which are usually held in those currencies. While they may appear to have a far more important part to play or, perhaps, an important future role, being the unit of account for the IMF has long been the main function of the XDR.[3]

 

Created in 1969 to supplement a shortfall of preferred foreign exchange reserve assets, namely gold and the U.S. dollar, the value of an XDR is defined by a weighted currency basket of four major currencies: the U.S. dollar, the euro, the British pound, and the Japanese yen.[1] Special Drawing Rights are denoted with the ISO 4217 currency code XDR.[4]

XDRs are allocated to countries by the IMF.[1] Private parties do not hold or use them.[5] As of March 2011, the amount of XDRs in existence is around XDR 238.3 billion, but this figure was expected to rise to XDR 476.8 billion by 2013.

 

==

> http://en.wikipedia.org/wiki/Special_drawing_rights

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Basket of currencies determines the value of the SDR

 

The value of the SDR was initially defined as equivalent to 0.888671 grams of fine gold—which, at the time, was also equivalent to one U.S. dollar. After the collapse of the Bretton Woods system in 1973, however, the SDR was redefined as a basket of currencies. Today the SDR basket consists of the euro, Japanese yen, pound sterling, and U.S. dollar. The value of the SDR in terms of the U.S. dollar is determined daily and posted on the IMF’s website. It is calculated as the sum of specific amounts of the four basket currencies valued in U.S. dollars, on the basis of exchange rates quoted at noon each day in the London market.

 

0.888671 grams (/ 28.3495) : 0.31347 Ounces x $1,200 = $37.62 (orig. system)

 

TODAY (11/21/2014): SDR = $1.462 ... 0.03454 Gold Gms

========

Friday, November 21, 2014

Currency Currency amount under Rule O-1 Exchange rate 1 U.S. dollar equivalent Percent change in exchange rate against U.S. dollar from previous calculation Euro 0.4230 1.24260 0.525620 -0.877 Japanese yen 12.1000 118.00000 0.102542 0.127 Pound sterling 0.1110 1.56640 0.173870 -0.153 U.S. dollar 0.6600 1.00000 0.660000 1.462032 U.S.$1.00 = SDR 0.683980 2 0.328 3

// SDR1 = US$ 1.462030 4

 

UPDATE : http://www.imf.org/external/np/fin/data/rms_sdrv.aspx

At $1,200 /oz. that's 0.0012183 Oz, or 0.03454 Gms

 

==

> http://www.imf.org/external/np/exr/facts/sdr.HTM

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Push for yuan as IMF Reserve Currency, SCMP, pg.1

 

Central bank chief vows to further liberalise capital account controls

 

+ Christine Leguard says criteria used for capital accts may be liberalized

+ This may boost odds for investment in RMB, & for RMB to join SDR

+ SDR basket is now: USD, EUR, JPY, and GBP

+ Citibank: "A reasonably high chance the vote will go China's way

+ RMB will automatically be a reserve currency, if in SDR

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