Sunday, December 11, 2011

CME and renminbi collateral

While the focus has been on MF Global, the CME announced that it will allow the Chinese currency to be used as collateral for futures. Symbolically this is very significant. The center of financial trading capitalism will say that a controlled currency can be used to meet margins. This shows how far the renminbi has come and how powerful the Chinese economy and financial system is to the global finance world, but it does seem odd that a controlled currency that does not freely float can be used as viable collateral. 

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