Great explanation. Thanks so much.
I’ve read that they decoupled the RMB from the USD because they don’t want to keep up with the strengthening dollar anymore…instead of trading so much with the United States and buying up so many U.S. Treasuries, they now want to focus on their local trading partners who have looser monetary standards.
Why do you think they decided to tie it to such a diverse basket though? Is it because they need to finance debt from many countries in order to keep up with what they used to purchase from the United States? Therefore, they have a vested interest in multiple currencies and need to do what they can to stay tied to all of them?
