Why China's About to End Dollar-Peg

Jeff Nielson

China is willing to take whatever “hit” that it must on the U.S. dollars which it is holding (through currency swaps), because it is effectively “sterilizing” global trade from the cancerous effect of the biggest flood of greenbacks in history (and the horrific inflation they would cause). Instead of these depreciating dollars being used again and again, in that back-and-forth flow of trade, those dollars have been removed from global markets – and replaced with renminbi.