Why Do Chinese Banks Need More Dollars?

china dollar shortage

Hmmm, interesting question so let’s uncover some interesting facts about the economy and Chinese banks. Many continue to declare that the dollar will die and that the Yuan will emerge as the “reserve currency” of the world. Well, no. There are so many debts and obligations denominated in dollars that for this to occur you’ll need to wake the world up when there are no more dollar obligations to be paid by individuals, businesses, or governments. Until then, there is always demand for dollars.

Until 2017ish banks in China had dollar surpluses. Their dollar assets exceeded their dollar liabilities. Since then and through the end of 2018 this has completely changed. Chinese banks have dollar denominated liabilities far in excess of assets. What this means is that bills and obligation that need to be paid in dollars are just that – in need of dollars to pay them.

Check out this piece from ZeroHedge.com for more.

The more capital controls they throw down, the more Chinese worry about the value of the Yuan and protecting their wealth. Bitcoin anyone?

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