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Domingo, 6 de diciembre de 2015
It’s a symbolic event — China is the first developing country to achieve this status. And if you ask me, it was a bit rushed: China is big, but it still has capital controls, which means that its currency isn’t freely negotiable the way that other major currencies in the basket are.
How much difference does this make for the real economy? Almost none.
Though that’s not what you usually hear. A recent commentary article in The New York Times by the generally excellent economics correspondent Neil Irwin compared the rise of the renminbi to the gradual replacement of the British pound by the American dollar “as the predominant currency for global trade and finance.” He goes on to say that “this development was a crucial piece of the nation’s rise to superpower status.” (Read the article here: nyti.ms/1Ikj05z.)
Actually, no it wasn’t. The United States became a superpower because its economy was huge — by 1913 the economy was already about as big as the combined economies of Western Europe, and it was even more dominant after World War II. The international role of the dollar was, at best, a minor footnote to this story.
Ask yourself: What special privileges does having a reserve currency bring? People who don’t work in international monetary economics tend to make claims about America having a unique ability to run trade deficits, or to borrow in its own currency, or to extract large amounts of resources from other countries because of “exorbitant privilege,” but none of this is true. At most, the dollar’s special role might mean that the United States has slightly lower borrowing costs — although there’s little evidence of that — and a de facto zero-interest loan from people holding American currency outside the country.
And it’s far from clear that China will even get these minor payoffs: Putting the currency in the S.D.R. should have very little bearing on the willingness of individuals to hold the currency in cash, or even to buy renminbi-denominated bonds.
The economist Maury Obstfeld wrote a nice survey of the S.D.R. a few years back (here: bit.ly/1PsozBt), which put things in perspective. Essentially, the S.D.R. at present provides a limited credit line to countries that want to borrow reserves of actual currencies from other countries. “The basket valuation of the S.D.R. is motivated by denominational convenience,” Mr. Obstfeld wrote, “and can be argued to be quite incidental (and inessential) to the main purposes.”
In other words, this is little more than a minor change in accounting, with trivial economic implications.