Hacker News Reader

Comment by luser001 | Hacker News Reader

Hmm, what evidence do you have that China wants a gold-backed yuan? AFAIK, yuan is at present a fiat currency.

Isn't the notion of a gold backed currency considered antiquated now? My understanding is that both the US dollar and Euro are fiat currencies as well, the US dollar having abandoned the gold standard in the 70s (http://en.wikipedia.org/wiki/Nixon_Shock).

This week's edition of Forbes:

http://www.forbes.com/sites/steveforbes/2012/10/03/gold-can-...

Returning or going to a gold standard is a very regular recommendation by assorted persons. My personal perspective is that it's intuitive, but suspicious, and I'm not willing to invest the momentous amount of time and effort it would take to feel confident in taking one side or the other. (Other people need a smaller investment to feel confident.)

I've updated the post to clarify, as obviously nobody knows for sure. Many financial pundits think it might happen, with the RMB backed by a combination of gold and a basket of currencies.

By "backed by" I think you mean operated as a managed-float with these things as a basis.

RMB has lots of influence in Asia because many countries in the region are exporters to the US and Europe and in direct competition with China there. Countries like Malaysia have a managed-floating currency based largely on the value of the RMB to make sure that they can compete effectively with China on a day-to-day basis when dealing in foreign exchange. I believe this is part of the reason analysts tend to give the RMB too much credit, once China grows to the point of higher internal consumption and less export dependency we will see many Asian currencies reforumlate their floats to reduce the emphasis on China.

Yep, still a managed float, with gold perhaps added to the basket at some point to make the RMB a partially gold-backed currency. Up until a few years ago, the Swiss Franc was 40% backed by gold.

Reply on news.ycombinator.com