Heavy in dollars, China warns of depreciation

The oscillation between acceptance and chastisement of the dollar based system continues from China. This goes hand in hand with conflicting reports about gold. China is a master at using the media to not only plant suggestions but also misdirect true intentions. Bottom line, when the benefits of supporting a struggle system no longer outweigh the costs - a decision that will be directed by the markets and capital flows, a change will be made.

Couple of obvious but nevertheless interesting points

"Once a reserve currency's value becomes unstable, there will be quite large depreciation risks for assets," she wrote in an article that appeared in the latest issue of China Finance, a Chinese-language magazine published under the central bank.

"A diversified international currency system will be more conducive to international economic and financial stability," she added.

To that end, developing countries must speed up reform of their financial markets, and China would work to promote greater cross-border use of the yuan, she said.

Source: reuters.com

Thanks Jack.