Economy

SYDNEY (Reuters) – Australia’s fourth largest pension fund suspended new work with PwC Australia on Tuesday, the latest in a string of funds to pause work with the accounting firm over a scandal which first surfaced in January over the misuse of government tax plans.The decision by UniSuper, which manages A$115 billion ($77 billion), means five of Australia’s largest pension funds, managing a total of some A$865 billion, have paused work with PwC, which says it is a “leading adviser” to the sector.UniSuper said it was concerned by recent events at PwC and the fund had suspended new contracts for the “immediate future”.The move comes a day after the “big four” accounting firm sacked eight partners, including its former chief executive, who had yet to leave the firm, in a bid to “re-earn trust”.PwC, which was UniSuper’s internal auditor according to the fund’s 2022 annual report, declined to comment.”While PwC has provided the Fund with an assessment that the relationship we have built over years has not been affected by this situation, we have sought further assurances on this matter,” a UniSuper spokesperson said.Tax authorities revealed in January a former PwC partner who advised the Australian government on anti-tax avoidance laws had shared confidential drafts about the government’s plans with colleagues then used this to drum up business with companies.The scandal has already cost PwC a string of high profile clients, including the Reserve Bank of Australia, and forced the sale of its lucrative government consulting business for A$1.($1 = 1.4972 Australian dollars) More

1. Global stocks muted amid U.S. holiday, light data calendarEuropean and Asian stock markets hovered broadly around the flatline on Tuesday as investors were searching for cues in a light data calendar and a U.S. holiday.At 05:07 ET (09:07 GMT), the DAX index in Germany slipped 6 points or 0.04%, France’s CAC 40 rose by 3 points or 0.05%, and the pan-European Stoxx 600 gained 1 point or 0.23%. In the U.K., the FTSE 100 index edged up by 8 points or 0.11%.The muted trading in the region comes after shares in Asia moved in a flat-to-low range, with a string of weak data prints from major economies denting risk appetite. Japanese stocks, in particular, slid from 33-year highs, in a sign that a recent rally in equities in the country may be stalling.Elsewhere, China’s Shanghai Shenzhen CSI 300 and Shanghai Composite posted small increases, while the KOSPI in South Korea shed 0.35%.Markets on Wall Street, meanwhile, will be closed today for the Independence Day holiday.2. Meta’s Twitter rivalFacebook-owner Meta (NASDAQ:META) is set to unveil its answer to Twitter later this week, according to a listing in the Apple App Store, piling pressure on Elon Musk’s social media company to retain users who have become disgruntled over the billionaire’s management of the business.Meta’s new service, Threads, will launch on Thursday. The “text-based conversation” app, which will be directly linked to Meta’s mega-popular photo-sharing platform Instagram, claims that it will be place “where communities come together to discuss everything from the topics you care about today to what’ll be trending tomorrow.”The release of Threads could prove to be yet another challenge for Twitter. Users have already begun to seek alternatives to the platform in response to controversial decisions taken by Musk, who bought the company for $44 billion in October.Most recently, Musk announced that limits will be placed on the number of posts that can be viewed, saying it was necessary in part to “address extreme levels of data scraping.” The decision was widely slammed by users, many of whom pay monthly fees for increased prominence on the site.3. China curbs exports of semiconductor metalsChina has restricted access to exports of two crucial minerals used in the creation of computer chips, in the latest salvo in the war over semiconductors between Beijing and the West.According to China’s Ministry of Commerce, the minerals gallium and germanium will be subject to unspecified export controls starting next month. The U.S. has said the metals are crucial in the production of microchips, military equipment, and communications.In a statement, the Chinese ministry said the measure will help protect “national security and interests.”Meanwhile, the Wall Street Journal reported on Tuesday the U.S. is also preparing to place restrictions on Chinese companies’ access to cloud computing services, including those of Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT).4. Supply cuts push up oilOil prices climbed on Tuesday, as traders weighed increased supply cuts by key exporters Saudi Arabia and Russia against signs of weakening global economic activity.At 05:10 ET, U.S. crude futures traded 0.70% higher at $70.49 a barrel, while the Brent contract added 0.74% to $75.39 per barrel.Saudi Arabia announced on Monday it will extend its recently announced 1 million barrels per day cuts to August and potentially beyond, while Russia also said it will trim its oil exports by 500,000 bpd.However, any gains are likely to be limited with U.S. markets on holiday.5. RBA keeps interest rates steadyThe Reserve Bank of Australia has decided to maintain its cash rate at an 11-year high of 4.10% on Tuesday, as it attempts to gauge the impact of the 400 basis points of hikes since last May on the broader economy.But Australia’s central bank flagged that further tightening may still be needed to bring down elevated price growth. Inflation rose by 5.6% on an annual basis in May, according to official data, although this was slower than a recent peak of 8.4% in December.”Inflation is still too high and will remain so for some time yet,” warned RBA governor Philip Lowe in a statement.The RBA is one of several central banks to embark upon a campaign of aggressive borrowing cost increases recently; the trend that has been a major driver of trading sentiment throughout 2023. More

BEIJING (Reuters) – China’s appointment of financial technocrat Pan Gongsheng to a top political post at the central bank points to growing concerns within the country’s leadership over systemic risks in its sprawling financial sector, policy insiders and analysts said.Pan, who came to prominence fighting capital outflows, will be in position to take over the top job at the People’s Bank of China (PBOC) when Governor Yi Gang steps down, two policy sources told Reuters.The central bank did not immediately respond to Reuters’ request for comment. Pan, central bank deputy governor since 2012 who turns 60 this month, is not expected to deviate from China’s measured pace of policy easing to support the recovery, analysts said. He has forged a reputation as a risk averse central banker, playing a key role in enforcing several crackdowns on perceived financial threats in the past decade. His appointment comes as China tries to ward off major challenges to its financial stability from about $9 trillion of local government debt and a downturn in the property sector, which accounts for roughly a quarter of economic activity.”He will be able to implement key financial policies from the top to cope with economic uncertainties,” said a source involved in policy discussions who preferred not to be identified due to the sensitivity of the matter.”His professional ability will help safeguard the bottom line of systemic financial risks, especially as the property sector is slowing, and fend off a big systemic crisis.”In 2016, Pan also took on the role of China’s top foreign exchange regulator, managing the world’s largest foreign exchange reserves of around $3.2 trillion. He is known for taking a tough stance against currency speculators and was also involved in state banking reforms, tightening property market and fintech regulations, and in banning cryptocurrencies.In a speech in late May, Pan spoke at length about preventing and resolving financial risks as an “eternal theme,” calling for better coordination between regulators in the context of a “complex and ever-changing external environment.” It is not immediately clear how Pan will look to make an impact, but PBOC watchers expect him to steer policy to support the economy, even as the central bank has limited room to manoeuvre, and use its macro-prudential rules to curb risks. “Pan’s appointment will help maintain policy continuity and stability, as we face pressures internally and externally,” said Gu Tianyong, an influential economist at the Central University of Finance and Economics in Beijing. In an unexpected move, the ruling Communist Party appointed Pan as the central bank’s party secretary on Saturday, taking over from Guo Shuqing. The Wall Street Journal, citing people familiar with the matter, said the move was a prelude to replacing Yi.Yi’s predecessor Zhou Xiaochuan also held the governor and party secretary roles simultaneously. If confirmed, Pan, who did post-doctoral research at Cambridge University and was a senior research fellow at Harvard University, will have a consolidated position of power, albeit in an institution reporting into new regulators.China has taken a series of steps this year to tighten party control over the country’s vast, but largely closed, financial system, including plans to set up the Central Financial Commission to oversee the PBOC and other financial regulators.Zhou and Yi introduced pro-market reforms during their mandates, but the new structure limits PBOC’s policymaking abilities and fits better with Pan’s focus on risks, analysts said.MEASURED EASINGThe world’s second-largest economy, under an overall debt burden of three times its output, is struggling to gain momentum due to waning external demand and its failure to lift household consumption, a long-standing weak spot.But on monetary policy, risk-wary Pan is seen likely to support the current path of measured easing steps.”We need to consider how to stimulate the economy, but we should first make sure risks are under control,” said a second policy insider.The PBOC cut its benchmark interest rates for the first time in 10 months in June by a modest 10 basis points, and further easing measures in coming months are expected to be similarly restrained, especially as credit demand remains subdued.”The room for monetary policy easing is limited and the effectiveness faces many constraints,” said Xu Hongcai, deputy director of the economic policy commission at the state-backed China Association of Policy Science. More

UK supermarket chain J Sainsbury has provided further evidence that food price inflation is easing, as the group reported an almost 10 per cent increase in sales.“Food inflation is starting to fall and we are fully committed to passing on savings to our customers,” Sainsbury’s chief executive Simon Roberts said in a trading update on Tuesday. “Prices on our top 100 selling products are now lower than they were in March.”Households are facing the biggest squeeze in living standards since the 1950s. Inflation remained at 8.7 per cent in May, according to official figures, while mortgage borrowing costs have risen sharply. Data provider Kantar published figures last week showing food price inflation had slowed for a third consecutive month, although it remained a big factor in overall inflation. The comments by Roberts echo those of Tesco chief executive Ken Murphy who last month said there were “encouraging” signs that inflationary pressures were easing.Sainsbury’s on Tuesday reported a 9.8 per cent increase in like-for-like sales, excluding fuel, for the three months to June 24, driven by volume growth rather than price increases, the company said. Grocery sales rose 11 per cent, with general merchandise up 4 per cent, ahead of analysts’ expectations. Roberts warned that although food price inflation was coming down, prices were “not going back to where they were because the cost of producing food is clearly elevated from where it was a year or two ago”. Labour costs are up 10 per cent year on year, he added. Food prices were falling most in fresh food, where they had risen the most over the past year or so, but inflation was more persistent in other categories. Roberts again rejected claims that supermarkets were “profiteering” on food prices, saying profit margins of less than 3 per cent were at their lowest “for a number of years”.The group kept its forecast of underlying profit before tax of between £640mn and £700mn for the year unchanged. Asked who might be benefiting from surging inflation, Roberts said: “No one wants inflation at this level. Customers don’t want it. No business wants it. Clearly the government doesn’t want it.” More

Headline CPI in May came in at 8.7%, unchanged from the previous month, while core inflation — which excludes volatile energy, food, alcohol and tobacco prices — increased to 7.1%, its highest rate for 31 years.
Economic growth has all but stagnated and public debt has surpassed 100% of GDP for the first time since March 1961.
Shaan Raithatha, senior economist at Vanguard, told CNBC’s “Squawk Box Europe” on Monday that the U.K. is suffering from the “worst of both worlds.”

Sunak has reiterated his “total support” for the Bank of England and under fire Governor Andrew Bailey.
STEFAN ROUSSEAU/POOL/AFP via Getty Images

LONDON — In January, with one eye on a critical general election in 2024, U.K. Prime Minister Rishi Sunak vowed to halve inflation by the end of the year.
At the time, headline consumer price inflation was running at an annual 10.1%. Given that most economists were projecting that this would halve naturally as the shock of soaring energy prices fell away, the pledge seemed like an open goal for Sunak’s Conservative government.

Yet headline CPI in May came in at 8.7%, unchanged from the previous month, while core inflation — which excludes volatile energy, food, alcohol and tobacco prices — increased to 7.1%, its highest rate for 31 years.
Annual average wage growth excluding bonuses also accelerated from 6.7% to 7.2% in the February-April quarter, the fastest rate on record, while the labor market remains hotter-than-expected and the U.K. has faced a unique spike in long-term sickness that has hammered its labor force participation rate.
Meanwhile, economic growth has all but stagnated and public debt has surpassed 100% of gross domestic product for the first time since March 1961.
The Bank of England re-accelerated the pace of interest rate hikes in June, raising the Bank rate by 50 basis points to 5%, further compounding domestic fears of a mortgage crisis and diverging from other major central banks that have been able to either slow or pause rate hikes.
Shaan Raithatha, senior economist at Vanguard, told CNBC’s “Squawk Box Europe” on Monday that the U.K. is suffering from the “worst of both worlds.”

“We’ve had a U.S.-style labor market shock, particularly the large number of long term sickness that has really impacted the supply of labor there, and they’ve also had a European-style energy shock emanating from the war in Ukraine,” he said.
“What is perhaps surprising is that the energy shock in the U.K. was larger than in most of mainland Europe.”
Raithatha suggested this could partly be a result of government policymakers being too slow to step in during the early stages of the energy crisis, and when they did step in, capping energy prices at a higher level than many peers.
“There’s an issue here because the economy is very resilient, we know that the transmission towards mortgages is a bit slower and a bit less effective than we’ve had in the past as well, and so clearly the Bank has to do a bit more to get inflation under control,” he added.
Problem ‘principally made in Moscow’
In the aftermath of the most recent inflation print, Sunak reiterated his “total support” for the Bank of England and under fire Governor Andrew Bailey.
In his January speech, the prime minister said the pledge to halve inflation was his personal responsibility, but should U.K. CPI remain stubbornly high through the end of the year, many expect the Bank of England to return to the crosshairs of government ministers looking to redirect blame.
“The economic and political cycles also appear mismatched for the government, especially as the case for pre-election tax cuts in 2024 is becoming harder to commit to at this point given public debt has surpassed GDP for the first time since March 1961,” said Richard Flax, chief investment officer at Moneyfarm.
“The chancellor reiterating his pledge to halve inflation this year while also promising to grow the economy and reduce debt appears to be a steep commitment given the challenges the U.K. faces.”

Following the high inflation print last month, Panmure Gordon Chief Economist Simon French said the U.K.’s problems were “principally made in Moscow but not exclusively made in Moscow,” adding that there is a “Brexit element” at play.
“There is a 4.5% increase in working age inactivity since the Brexit transition where all other G7 countries with perhaps the exception of the U.S. have seen inactivity falling, so we do look like an outlier in terms of impairments to the supply side of the economy which is driving core inflation higher,” French said.
“But Mr. Sunak has a narrative there as well which is fair, which is global factors. The U.K. is disproportionately impacted by the gas price because it’s a large part of the heating bill, but also the swing supply for electricity, and that has driven up the CPI component — headline — by 120% compared to about 40% in mainland Europe.”
In a recent CNBC-moderated panel at a monetary policy forum in Sintra, Portugal, Bailey noted that the U.K. labor force is unique in remaining below its pre-Covid levels.
“I see this when I go around the country talking to firms. What they say to me very frequently is that their plan is to retain labor as much as they can, even in the event of a downturn, because they’ve been concerned and it’s been difficult to recruit labor,” he said.
However, Bailey denied that Brexit was the key component in the labor market tightness and sticky inflationary pressures, instead citing the country’s response to the Covid pandemic.
The Bank has estimated a long-run downshift in the level of U.K. productivity of just over 3% as a result of Brexit, while fellow Monetary Policy Committee member Catherine Mann recently told a parliamentary committee that additional paperwork had damaged small firms and added to inflationary pressures.
“It’s not just small firms in the U.K. who want to export but it is also small firms in Europe who were suppliers and provided competition in the U.K. market, so there is an inflationary effect coming through the competition channel,” she added.
Bank of England ‘impotence’ and the ‘British disease’
U.K. inflation is still expected to fall sharply through the remainder of the year, in light of a 20% reduction in the energy price cap from July 1 and as the existing rate hikes feed through into the economy, compressing demand and employment.
The Bank of England has retained its data-dependent, meeting-by-meeting approach to monetary policy tightening, and members of the Monetary Policy Committee have openly challenged the market’s pricing for a peak rate of just over 6% through the winter of 2023 and into next year.
A major source of concern for economists is the central bank’s credibility, and Bailey recently offered a mea culpa on the MPC’s wayward forecasting of inflation over the last 18 months.
Panmure Gordon’s French suggested that if the Bank of England had “unimpeachable credibility,” policymakers could say the blunt tool of interest rates will take 18 months to two years to pass through the economy and retain the faith of markets and the public. However, its recent proclamations have not gained traction.

“The U.K. as an economy — 3% of global GDP, less than that in terms of population — is largely a price taker in terms of monetary conditions, and whether Andrew Bailey or indeed his predecessors want to admit to it, there is a degree of impotence in terms of the degree to which domestic monetary conditions can influence the domestic economic picture,” he said.
French likened the current economic picture to the “British disease” period of economic stagnation and high inflation in the 1970s, also noting that the U.K. hit double-digit inflation in the 1990s and was the only developed country with inflation significantly above target in the aftermath of the global financial crisis.
Thanos Papasavvas, founder of ABP Invest, also alluded to the unique susceptibility of the U.K. to high inflation, but said the Bank of England should have been alive to this far earlier.
“I put a lot of the blame on what’s been happening on the comments that he was making a couple of years ago, talking down inflation, the risk of inflation, and smiling about it at a time when there were inflationary pressures coming through and for a country which has had inflationary-prone tendencies,” he told CNBC.

“You don’t do that in the U.K. Even a few months ago, the expectations of inflation coming down to 2%, 3% were very unrealistic, so I think they’ve managed the communication very badly and they have a very hard decision.”
The Bank of England is undertaking a review of its inflation forecasting mechanisms, and Bailey recently told a parliamentary committee that the central bank had “lessons to learn” from the process, though it still sees inflation coming down rapidly this year, albeit at a slower rate.
Ahead of the coronavirus pandemic and the transition out of the EU in 2020, French highlighted that the Bank of England had managed 22 years of inflation averaging its 2% target, but that it had underestimated the supply side effects of Brexit.
He suggested there are “further frictions to come” in terms of food inflation and second-order effects as further checks on EU animal and plant imports are introduced later this year.
“Looking at some of the failings it’s made, some of the stuff was unforecastable, in terms of the futures and energy markets, some of the stuff actually bluntly they were asleep at the wheel in understanding the growth of U.K. imported labor supply,” French said. More

SYDNEY (Reuters) -Australia’s central bank on Tuesday held interest rates steady saying it wanted more time to assess the impact of past hikes, but reiterated its warning that further tightening might be needed to bring inflation to heel.Wrapping up its July policy meeting, the Reserve Bank of Australia (RBA) kept its cash rate at an 11-year high of 4.10%, having lifted rates by 400 basis points since May last year, in its most aggressive tightening cycle in modern history to tame inflation.Markets had been leaning towards a pause, but economists were split on the outcome, with 16 out of 31 polled by Reuters expecting a hike and the rest forecasting the bank to stand pat. [AU/INT] . [AU/INT] The Australian dollar dipped 0.4% to $0.6647, but has since recouped all the losses to trade at $0.6682 as traders expect at least one more hike in the current cycle. The market has now shifted to imply around a 50-50 chance of a hike to 4.35% in August, while scaling back the risk of a further move to 4.6%.In Tuesday’s policy statement, RBA Governor Philip Lowe said that higher interest rates are working to establish a more sustainable balance between supply and demand in the economy. “In light of this and the uncertainty surrounding the economic outlook, the Board decided to hold interest rates steady this month.”The RBA chief pointed to uncertainties about the outlook for household consumption and regarding the global economy. However, Lowe repeated previous warnings that some further tightening of monetary policy might be required as “inflation is still too high and will remain so for some time yet.” “Today’s decision to pause rate hikes shows the RBA has realised the economy is on a knife’s edge and that it must pivot to achieve its goal of threading a ‘narrow path’ through current economic conditions,” said Stephen Smith, Deloitte Access Economics partner. The RBA first paused in April and then surprised markets by resuming its hikes both in May and June, a hawkish tilt that led many economists to see a higher chance of a recession this year given anaemic economic growth. Economic data over the past month have been mixed. A sharp cooling in a volatile monthly inflation reading argued for a pause, but a blockbuster jobs report and strong retail sales point to some work to be done by the RBA. Sustained gains in housing prices, improving housing finance and a strong rebound in building approvals suggest financial conditions might have not been as tight as desired.HIKE IN AUG?Indeed, many economists see a decent chance of a hike in August after the release of the second-quarter inflation figures in late July, which is likely to reveal inflation remained sticky. “With the labour market still very tight, house prices rebounding strongly and unit labour costs surging, another 25bp rate hike in August still looks likely and we suspect the Bank will follow that up with another one in September,” said Marcel Thieliant, a senior economist at Capital Economics.The central bank currently forecasts headline inflation – which was running at 7% in the first quarter – to return to the top of its target range of 2-3% by mid-2025.Global policymakers are still grappling with relatively high inflation despite sweeping rate increases for more than a year. Both the Federal Reserve and the European Central Bank are almost certain to hike by a quarter-point this month, which could pressure an already soft Australian dollar. Lowe is also set to find out this month whether he would be reappointed for a second term. The governor, a four-decade veteran at the bank, has been under a cloud since repeatedly saying in 2021 that interest rates would not rise until 2024, only to reverse course and hike in mid-2022 when inflation unexpectedly surged. More

SHANGHAI/BEIJING (Reuters) – China’s major state banks have lowered their dollar deposit rates for the second time in a month, seven banking sources with direct knowledge of the matter said, as authorities have stepped up efforts to arrest a slide in the yuan.Interest rates offered by the “Big Five” state-owned lenders on most dollar deposits are now capped at 2.8%, down from 4.3% previously, said the people, who declined to be named as they were not authorised to speak to the media.The People’s Bank of China, which typically issues guidance on dollar deposit rates to state banks, did not immediately comment on the matter.The lenders – Industrial and Commercial Bank of China, Bank of China, Agricultural Bank of China (OTC:ACGBF), China Construction Bank (OTC:CICHF) and Bank of Communications – did not immediately respond to requests for comment.Traders and analysts said policymakers, worried that a prolonged yuan slide could both discourage foreign investment and spur an outflow of funds abroad, want to bring down dollar deposit rates – which typically track offshore rates – towards domestic rates, which have been cut to aid the flagging economy.The yuan is one of the worst-performing Asian currencies this year, knocked nearly 5% lower against the dollar by a slowdown in China’s economy and widening yield differentials with the United States. “It shows that the move is to narrow the interest rate advantage of the U.S. dollar in onshore markets,” said Ken Cheung, chief Asian FX strategist at Mizuho Bank.”It is likely aiming to prevent stockpiling dollars and encouraging (foreign exchange) settlements.”The lower rates could both discourage households from putting savings into higher-yielding dollar deposits and nudge Chinese firms, especially exporters, to settle foreign exchange receipts in yuan.The new rates came into effect on July 1, said two of the sources, adding that some of the banks were not offering rates above the 2.8% cap for large deposits. Banks typically offer higher rates to deposits exceeding $1 million.The PBOC, China’s central bank, has recently moved to brake the yuan’s slide against the dollar, setting stronger-than-expected daily fixings for the currency, while state banks have also been spotted selling dollars on occasion in both the onshore and offshore markets, trading sources said.The latest cut in dollar deposit rates was the second in barely a month. In early June, sources told Reuters the big state banks had lowered such rates as much as 100 basis points from the previous ceiling of 5.3%.Sources also told Reuters last week that the central bank has surveyed some foreign banks about the interest rates they offer to their clients for dollar deposits.The PBOC said last Friday it would continue to keep the yuan basically stable and guard against the risk of large exchange rate fluctuations.Some currency traders also said the cuts in dollar deposit rates would ease pressure on commercial lenders’ net interest margin, as banks’ dollar deposit rates had risen above lending rates before the recent adjustments.The latest PBOC data showed that the weighted-average interest rate on large dollar deposits stood at 5.67% in March, up 4.15 percentage points from a year earlier, while the weighted-average dollar lending rate was up only 3.74 percentage points at 5.34%. More

Earlier this year China made a big deal about how the renminbi had for the first time leapfrogged the US dollar in its own cross-border payments, following a big push to ‘internationalise’ its currency. Many think it will inevitably become the next big global currency, given that China is already comfortably the world’s second-biggest economy, its biggest trading power, and an emerging financial hub with capital markets only the US can rival in size. But how successful has Beijing actually been so far? A little in some areas, but not much on the whole, according to a Goldman Sachs report titled “Progress check on RMB internationalization” published yesterday.Take the renmimbi’s share of international payments. According to SWIFT, the Chinese currency’s market share has more than doubled over the past decade, from 1.1 per cent in 2013 to 2.5 per cent at the end of May 2023. But this remains paltry compared to the US dollar’s 43 per cent share (which actually increased over the period). Even sterling remains almost three times more important as an international payments currency.

The share of renminbi-settled trade in Chinese goods and services has climbed by 5.8 percentage points over the past decade to almost 20 per cent.But Goldman notes that the overall increase in the currency’s share in China’s cross-border payments has been mostly driven by more active foreign trading of RMB-denominated securities (thank you index inclusion!)

When it comes to the “store of value” part of being Kind Of A Big Deal, the renminbi also remains a dud. Only 0.7 per cent of international bonds are denominated in the Chinese currency. Its share of global central bank reserves has trebled since 2016 to about 3 per cent, but this is still only roughly Canadian dollar levels. And as much as people bang on about the US “weaponising” the dollar, does anyone reeeally feel more comfortable that Beijing would never use financial policy leverage? If so we have a Spac to sell you. Anyway, you can read the full GS report here. It goes a lot more in depth into all the various issues. Further reading:Dollar :-(Dollar :-)A (very short) history of global reserve currenciesCrude indicators for dollar’s dominance More