Germany to add China’s yuan to currency reserves

The yuan has gained increasing global clout in recent years and in September 2016 it joined the dollar, pound, yen and euro in the IMF’s elite “special drawing rights” reserve currency basket. (AFP)
Updated 16 January 2018
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Germany to add China’s yuan to currency reserves

BEIJING: Germany’s central bank has said it will include China’s yuan in its reserves, giving another boost to Beijing’s drive to internationalize the currency and helping send the unit to two year highs.
The Bundesbank said its board had decided in July to invest in the renminbi, as it is also known, to take account of its growing importance globally, though it did not say when it would begin to include it or how much it would purchase.
“The decision to accept the renminbi is part of a long-term diversification strategy and reflects the growing role of the Chinese currency in the world financial system,” Bundesbank board member Joachim Wuermeling said on Monday.
The German central bank regularly reviews the composition of its currency reserves “by weighing risks and benefits,” Wuermeling said.
“In addition to dollars and yen, (the bank) has invested in Australian dollars since 2013 and seeks to invest in other currencies.”
The move comes after the European Central Bank in June converted €500 million (SR2.275 billion) worth of its dollar reserves into yuan.
China was Germany’s top trade partner in 2016, ranking first in the European country’s imports and fourth as an export destination.
The Bundesbank’s currency reserves totaled some €170 billion in November.
The yuan has gained increasing global clout in recent years and in September 2016 it joined the dollar, pound, yen and euro in the IMF’s elite “special drawing rights” reserve currency basket.
It strengthened to 6.4138 against the dollar on Monday, its highest level since December 2015, according to China’s Foreign Exchange Trade System, but weakened slightly to 6.4319 on Tuesday.
The unit has rallied from lows close to 7.0 against the greenback seen at the turn of the year, with the dollar also coming under pressure from most other currencies.
China’s central bank only allows the tightly controlled yuan to rise or fall two percent on either side of a daily reference rate to prevent volatility but it takes into account market pressures when making its decision.
But the latest rise could lead officials to intervene, analysts say, to prevent the currency becoming too expensive.
Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered in Hong Kong, said: “Policy reactions may include outright interventions right before close, or a relaxation of outflow control measures to release the yuan appreciation pressure.
“The government will likely gradually expand the range each year, paving the way for a lightly managed float in two to three years.”
The yuan’s weakness against the dollar has been a sensitive issue with the US, with President Donald Trump in the past hitting out at what he calls unfair trade practices by China aimed at giving their exporters an advantage over US firms.


Meet the Dubai ad men who pay you to sit in traffic

Updated 20 August 2018
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Meet the Dubai ad men who pay you to sit in traffic

  • Blockchain technology challenges traditional outdoor media
  • Adverts connect to driver mobile phone

LONDON: A new startup founded by UAE-based entrepreneurs is in the process of test-running a blockchain-based technology that could help people turn their cars into mobile advertising vehicles.
It could challenge the use of traditional advertising methods such as outdoor billboards, the founders of The Elo Network claim.
The platform — which has been set up by Mohammed Khammas and Mohammed Bafaqih and incorporated in the Cayman Islands — will enable people to be paid for displaying adverts on the side or back of their vehicles while they go about their daily routines of driving to work, the mall or doing the school run.
The adverts will feature low-frequency bluetooth ‘beacons’ that connect to the drivers' mobile phone which will be able to monitor when the driver is in the car and where the car is being driven.
There is a minimum threshold for the number of miles being driven a day, but the main prerequisite is that the driver is in the car. Drivers will still be paid even if stuck in a traffic jam.
Advertising clients will be able to put out requests that drivers head to a particular area — for instance to be close to a new brand launch — with drivers being paid up to 4 or 5 times more than their standard rate if they accept.
While the concept of paying people to use their cars for advertising is not new, it is the use of blockchain technology that will make The Elo Network particularly grounding-breaking in the advertising world, its founders said.
“Billboards are very expensive and static and don’t give you the KPIs and insightful information that brands want these days. You solve that by getting them that data,” Bafaqih said.
The Elo Network collates detailed data by tracking the movements of the drivers and their day-to-day activities. Data points such as a particular area’s population density can been collected.
The information will be encrypted ensuring that the brand will never know the identity of the driver, said Bafaqih.
“It creates data sets that didn’t exist before. You don’t have to worry about privacy but at the same time the brand can know about your patterns. They can know where you go in mornings, where you drive, what normal patterns are created in certain areas and countries,” he said.
This level of detail is increasingly important for brands looking to run targeted campaigns, and it is something that traditional billboards are unable to offer.
The technology will also be used to overcome the payment problems that other similar car advertising schemes have faced.
“Historically what happens, where there is a authority that is issuing payments, it causes a lot of problems. There can be disputes on how much they (the drivers) are owed or how many miles were driven or what campaign someone has done,” he said.
Under the Elo Network program, the blockchain technology allows you to create so-called “Smart Contracts” — which is a software protocol that enforces and verifies the performance of a contract.
“It says driver A is going to be paid — for example — a dollar per mile — so as the person drives he starts receives ‘IOUs’. Those IOUs are convertible at any time,” he said.
With no ‘middle man’ involved, the driver is able to redeem their IOUs and get paid as and when they want.
The network is currently at ‘proof of concept’ stage and is test-running the platform with a number of brands. It is anticipated that the network will be rolled out to the public toward the end of this year and early 2019.