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Coin and bullion dealers who have supported GATA
By Ambrose Evans-Pritchard
January 7, 2002
BRUSSELS -- The Chinese government gave the euro its
much-coveted seal of approval yesterday, announcing that
it would switch part of its vast dollar reserves into the
world's emerging quot;reserve currency.quot;
Chinese finance minister Xiang Huaicheng said the flawless
launch of notes and coins had swept away the lingering doubts
about monetary union and opened the way for a recovery on
the exchange markets.
quot;I will instruct the responsible authorities that they should not
just have a currency basket but rather that they should buy
euros as quickly as possible,quot; he said after a meeting in
Shanghai with the German finance minister, Hans Eichel.
quot;It is an inevitable tendency that the euro will become a
reserve currency for a lot of states,quot; he said, predicting
that it would regain parity with the dollar.
China has roughly $200 billion (L140 billion) in foreign
reserves, the second largest in the world. A small
proportion is believed to be in euros already in the
form of deutschmark and French franc bonds, but a
major switch in asset allocation from dollars to euros
could be large enough to influence the currency markets.
The European Commission said yesterday that it was
the political gesture that really mattered. quot;What's
important is the political signal of confidence that this
transmits, not the volume of money,quot; said monetary affairs
spokesman Gerassimos Thomas.
China and the European Union share a joint suspicion of
American quot;hegemonyquot; in the global economic system
and have been edging toward mutual embrace for several
years. Beijing has a strong interest in promoting a rival
currency, but it has been waiting for clear evidence that
the euro is a viable long-term currency before committing
The Chinese backing for the currency came as a leading
consultancy said that the economic case for Britain entering
the euro will weaken in 2002 as UK interest rates rise and
eurozone rates fall sharply.
The Centre for Economic Business Research also said
that Britons' increasing familiarity with the new currency
could present an quot;unusual opportunity for the UK to have its
cake and eat it by staying outside.quot;
It estimates that, by the end of 2002, just over half the UK
population will have used euro notes and coins and that,
as a result, the present majority against joining will erode.
However, CEBR believes the Government is unlikely to
call a referendum within the next 18 months because it says
55-65 percent of voters would still come out against entry.