China's yuan to become more influential part of the global financial system, survey shows

The yuan’s rise

The Chinese yuan is on course to become a much more influential part of the global financial system with almost a third of central banks planning to add the currency to their reserve assets, a closely followed survey showed.

The Global Public Investor survey, published annually by the London-based OMFIF think tank, showed 30 per cent of central banks plan to increase yuan holdings over the next 12-24 months, compared with just 10 per cent last year.

It comes despite the differences between Western governments and China on the global stage. The yuan’s rise will almost certainly be a global trend, but may be especially strong in Africa where almost half of central banks are planning to increase their yuan reserves.

Other eye-catching findings showed that 75 per cent of central banks now thought monetary policy was having excessive influence on financial markets, although only 40 per cent thought these policies needed to be actively reconsidered.

In stark contrast to the yuan, 20 per cent of central banks plan to reduce their holdings of the US dollar over the next 12-24 months and 18 per cent plan to reduce their euro holdings.

Some 14 per cent also want to cut their holdings of euro zone sovereign debt in what could be interpreted as a response to the European Central Bank’s deeply negative interest rates.

The report also showed that only 59 per cent of central banks would be willing to use more than 30 per cent of their reserves in the event of a serious currency shock, while 45 per cent of pension funds now invested in gold, well up from 30 per cent in last year’s survey.

It estimated that central banks, sovereign wealth funds and public pension funds control a record US$42.7 trillion worth of assets. Central bank reserves alone rose US$1.3 trillion last year to new high of US$15.3 trillion.

The report also showed the dramatic impact the coronavirus and the lower-for-longer interest rate outlook was having.

Trends in diversification – to boost or maintain returns, or to incorporate a more sustainable investment approach – are accelerating.

In their search for yield, close to 30 per cent of global public investors – central banks, sovereign wealth funds and public pension funds – will reduce their exposure to developed market sovereign bonds, while more than 20 per cent plan to buy more emerging market government debt.

Just over a quarter of central banks also plan to expand their corporate bond holdings and 21 per cent will increase their allocations towards equities.

It is likely to add to the concerns the central banks themselves have that experimental monetary policy, such as negative interest rates and mass stimulus programmes, are exerting excessive influence on financial markets.

The way central banks are intervening in the market produces substantial changes to the prices of some assets and can lead to financial bubbles

Central bank respondent

“The way central banks are intervening in the market produces substantial changes to the prices of some assets and can lead to financial bubbles,” one unidentified central bank respondent cited in the report published on Wednesday said.

Global public investors are also increasing demand for sustainable assets and becoming more active investors. Some 92 per cent of central banks invest in green bonds and 21 per cent already in sustainable equities. Around 65 per cent of central banks plan to add to their green bond holdings, up from 45 per cent last year.

One in 10 central banks also said that sustainability was now their joint-most important institutional priority, although 50 per cent still did not explicitly implement environmental, social and governance (ESG) considerations in their portfolios.

“There has definitely been an acceleration [towards ESG] due to Covid-19,” OMFIF’s Chief Economist Danae Kyriakopoulou told Reuters.

“At the beginning [of the pandemic], we thought there would be a focus on the short-term, the quick boosts to recoveries. But actually there has been this realisation that our financial systems are so vulnerable to things outside the financial world.”

News Related

OTHER NEWS

WarnerMedia opens regional hub in Singapore

Mrs Josephine Teo (left) and Mr Clement Schwebig, Managing Director of WarnerMedia for India, Southeast Asia and Korea, touring the WarnerMedia’s office in Fusionopolis on Sept 24, 2021. Major media ... Read more »

Meng's surprise release may not improve China's relationship with US or Canada, analysts say

The surprise agreement between US prosecutors and Huawei Technologies Co. executive Meng Wanzhou that allows Meng to return to China after nearly three years of detention in Canada will not ... Read more »

GoodRx's subscription programs now have over 1 million subscribers, co-CEO says

GoodRx co-CEO Doug Hirsch on Friday told CNBC's Jim Cramer the company has amassed more than a million subscribers across its subscription offerings, while expressing confidence about future growth for ... Read more »

BAAC sparks up cannabis farming loan scheme

Mr Somkiat warned that the cannabis is not for any farmer. The Bank for Agriculture and Agricultural Cooperatives (BAAC) has started offering loans this month to plant cannabis for community ... Read more »

Cramer's week ahead: 'We're now headed into a calm before the storm moment here'

Next week could be a relatively calm stretch for Wall Street, CNBC's Jim Cramer said Friday, but he advised investors to start preparing for trading days on the horizon. “Get ... Read more »

How to age well: actress Charlie Yeung says giving birth at 42, to twin boys, has kept her feeling youthful

Although she hasn’t had an uninterrupted night’s sleep since the premature birth of her twin boys in 2017, actress and former singer Charlie Yeung Choi-nei says they have given her ... Read more »

Slash tourist entry rules, urge firms Industry is eager for high season

People enjoy at a beach in Phuket on Sunday. The island has opened for foreigners who are fully vaccinated to visit the resort island without quarantine. (Reuters photo) Tourism operators ... Read more »

Exports continue growth in August, but slacken pace

Exports rose in August at a slower pace than the previous month, attributed to the government's tighter restrictions affecting manufacturing and logistics systems. The Commerce Ministry reported on Friday customs-cleared ... Read more »

Sales of Russian-made electric car to start in 2024 — Avtotor

The retail price of the new car will be up to 1.5 million rubles ($20,625) Read more »

Russia to increase share of low-carbon energy sources to 90% by 2035 — Deputy PM

About 87% of the electricity generated in Russia comes from carbon-free or low-carbon sources Read more »

Dow Jones, S&P 500 end with gains up after bumpy week, but Nike drags

Stocks bounced back from a sharp selloff at the start of the week tied in part to concerns over a default by China’s Evergrande and its potential risk to global ... Read more »

Stocks end mixed on Wall Street, S&P 500 manages weekly gain

Wall street closed out a choppy week of trading Friday with a mixed finish for the major stock indexes, though the S&P 500 managed its first weekly gain in three ... Read more »

China says all crypto transactions illegal; Bitcoin tumbles

China’s central bank on Friday declared all transactions involving Bitcoin and other virtual currencies illegal, stepping up a campaign to block use of unofficial digital money. Friday’s notice complained Bitcoin, ... Read more »

Stock Blog: Wall Street Mutes Unrest Over Chinese Real Estate Giant; Nike falls hard

Dow Jones and the S&P 500 finished 0.1% and 0.2% respectively after a red start. The Nasdaq is fractionally lower. The AEX ends with a minus of 1.1% at a ... Read more »

US does not prosecute Huawei top woman

The US no longer wants to prosecute Chinese Huawei CEO Meng Wanzhou for fraud and breaking a trade embargo with Iran. A deal with the US prosecutor should clear the ... Read more »

‘If you are going to be an entrepreneur, start as young as possible'

Things went wrong during a trip through the United States. It was December 2018 and Stijn Koster had just sold his Rotterdam hosting company i3D.net for millions to game developer ... Read more »

United Airlines fined $1.9 million for long tarmac delays, in largest-ever penalty

Between December 2015 and February, United allowed 25 flights to remain on the tarmac for lengthy periods without allowing passengers to deplane, the DOT said. Read more »

Prosecution of Huawei leader off job due to US justice deal Financial

The deal is a so-called agreement for deferred prosecution, an alternative to trial. A public prosecutor then agrees not to prosecute if the accused agrees to meet certain requirements. The ... Read more »

Nike, Adidas back in favor with Chinese consumers: survey

81 percent of Chinese consumers surveyed indicated they planned to buy Nike, while 49 percent said they planned to buy Adidas. Nike and Adidas are again popular with Chinese consumers ... Read more »

Downing Street on brink of U-turn to plug gap in petrol driver shortages

Ministers met earlier for urgent talks on how to address the shortage - which one industry body estimated at more than 100,000 drivers - but No 10 has not yet revealed what measures will be taken. Read more »

How China's Belt and Road Initiative could benefit from Ig Nobel Prize-winning research

As world leaders gathered this week at the UN General Assembly in New York, I wonder how many recall that nine of them were winners last year of the Ig ... Read more »

‘Because of the different time zones, I'm always working'

‘The price you pay for running an international hairdressing empire? Get up early, my alarm goes off at half past five. I live in New York, where we have a ... Read more »

Stock blog: real estate slump in China hurts Wall Street little

At around 7.30 pm (Dutch time), the Dow Jones and the S&P 500 are virtually unchanged. The AEX ends with a minus of 1.1% at a position of 791.45 points. ... Read more »

Cramer says his charitable trust bought back Disney after exiting its position in June

Disney character Mickey Mouse is seen above the entrance at Disneyland Paris during the 25th anniversary of the park, in Marne-la-Vallee, near Paris, France.Benoit Tessier | Reuters CNBC's Jim Cramer ... Read more »

Lowering the threshold for access to debt restructuring for people with problematic debts

Minister Dekker: ‘We have to be alert to the occurrence of debts, because they can disrupt people’s lives. If you nevertheless have to deal with debts, you must of course ... Read more »

VDL figures show impact of material shortage

Fighting over batches of steel, stocks that rise because products cannot be finished, car factory Nedcar that was closed for more than a month: the presentation of the half-year figures ... Read more »

Protest by striking airline Alitalia employees

Photo: ANP Hundreds of striking workers at Italian airline Alitalia protested on Friday. They want better working conditions at the relaunch of Alitalia under the new name Italia Trasporto Aereo ... Read more »

Technical analyst: ‘Still room for AEX rise'

During the webinar, made possible by bank Société Générale, technical analyst Geert-Jan Nikken of Trade Idee stated that the AEX, after its closing record above 800 points on Thursday, could ... Read more »

Costco, Nike and FedEx are warning there's more inflation set to hit consumers as holidays approach

A worker wearing a protective mask removes rotisserie chicken from skewers inside a Costco store in San Francisco, California, on Wednesday, March 3, 2021.David Paul Morris | Bloomberg | Getty ... Read more »

If climate policy does hurt

No, you can just keep barbecuing! And we are not going to say that you should eat less meat. Or maybe a little less flying. Because climate policy should remain ... Read more »

Storyboard | WPP fined for bribery-related scheme in India by US regulator

Representative image The US Securities and Exchange Commission (SEC) on Friday announced that London-based WPP plc, the world’s largest advertising group, has agreed to pay more than $19 million to ... Read more »

Bulk Deals | Nomura, Plutus Wealth, IIFL & Abu Dhabi Investment pick 5% stake in Sansera Engineering

Automotive components manufacturer Sansera Engineering witnessed significant buying on its listing day (September 24) at the bourses and this could be one of the reasons behind a better-than-expected listing premium as ... Read more »

Women professionals should come forward to work in the Indian real estate sector: Housing Secretary

Women professionals should come forward to work in the Indian real estate sector, which has immense potential due to rapid urbanisation in the country, Housing and Urban Affairs Secretary Durga ... Read more »

Barry Diller's IAC in talks to buy People magazine publisher Meredith

IAC is in talks to buy Meredith, publisher of People, Entertainment Weekly and Real Simple. Getty Images Barry Diller’s IAC is in advanced talks to acquire Meredith, the publisher of ... Read more »

'The View' pulls 2 hosts off the air over positive Covid tests, minutes before interview with VP Harris

Ana Navarro and Sunny Hostin on the set of ABC's The View.Jeff Neira | Disney General Entertainment Content | Getty Images Two hosts of ABC's “The View” tested positive for ... Read more »

Brent crude oil surpasses $78 per barrel, first time since October 2018

WTI crude oil rose by 0.93% to $73.98 per barrel Read more »

Novatek top executive Mark Gyetvay released on bail United States — court files

The US Department of Justice asked for a $80 million bail for Gyetvay, the request was approved Read more »

Uttarakhand: Cabinet gives nod to payment of revised DA

Uttarakhand Chief Minister Pushkar Singh Dhami (Image: Twiter/@ANI) The Uttarakhand Cabinet on Friday gave its approval to payment of revised dearness allowance to the state government employees. The state government ... Read more »

Keep LMO stock at 95% capacity, Maharashtra tells manufacturing units

(Representative image) After announcing the reopening of schools and places of worship from the first week of October as the number of coronavirus cases decline, the Maharashtra government on Friday ... Read more »

Forex reserves down by $1.47 billion to $639.64 billion

Representative image The country’s foreign exchange reserves declined by $1.47 billion to $639.642 billion in the week ended September 17, RBI data showed on Friday. In the previous week ended ... Read more »