Why is RMB exchangeable for USD when it’s a controlled Commie currency? Its circulation is tightly control by CCP
rmb circulation ish backed by usd. not all, but by a huge percentage, like say 50%.
therefore they are in a symbiotic relation, with usd as host and rmb feeding off it.
thats why CCP always need usd, and need to be exchangeable with usd in some ways,
in order to have rmb functioning properly. rmb itself has no credibility on intl mkt,
becos it ish not a freely exchangeable currency. why would anyone trust this kind of currency?
therefore it can NEVER be the big brother as long as it ish tightly controlled by CCP.
but currently, other countries still give face to rmb, just becos it can still be exchanged with usd.
if not, everyone will shun it.
ppl would be confused, why tiongland being such a big economy, rmb cannot stand on its own.
well this is the interesting part, becos logically speaking, rmb CAN stand on its own.
if tiongs started off as any normal 3rd world economy and grow to its current status,
rmb slowly picked up pace and intl recognition, it CAN be recognised as a powderful currency.
but commies took the easy way out and soft-pegged it to usd, even used usd as a backer,
then rmb ish no longer an independent currency liao, it became a usd subvariant.
and it ish a big one like a super big tumour feeding on the host aka usd.
so once it fallout with usd, given its huge economic size/presence now,
there will be super huge impact, ppl would lose faith in it overnight becos of fear of losses.
that tumour ish no longer a part of the usd host, but a huge lump of useless meat on its own.