The Global Forum of Japan (GFJ) E-Letter

1 February 2017, Vol. 10, No. 1

http://www.gfj.jp/e/

Greetings,
 
"The Global Forum of Japan (GFJ) E-Letter" is delivered electronically bimonthly, free of charge, to the readers in the world interested in Japanese thinking on the relations of Japan with the rest of the world and other related international affairs by the Global Forum of Japan (GFJ), a private membership organization in Japan for policy-oriented international exchanges.

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"GFJ Commentary" presents views of members and friends of GFJ on the relations of Japan with the rest of the world and other related international affairs. The view expressed herein is the author's own and should not be attributed to GFJ.




       The key currency must be the standard of global economic index in goods and services around the world, and therefore, it is necessary that the currency be internationalized in the global financial society, and that needs to be recognized in the market. Once it is recognized as the key currency, we can see a phenomenon that the official quotation of the price of main goods and services is more likely to be provided in that currency.

       And once the official quotation of the price of these main goods and services is provided, payments will be made in the key currency normally, and as a result, it will be necessary for financial institutions which settle international financial payments to include the key currency into their assets for a settlement currency. Since that is the fund for settlement, it must be raised immediately when it is in shortage, and supplied immediately when it is in surplus.

       From this point of view, when financial institutions make settlements, they locate their assets to the place where they can invest and raise their settlement fund easily, which is the country that issues the key currency. International settlement currency is the most accessible there.

       In that case, the fund located in the country of the key currency is under legal authority of the government that issues the key currency, and thus, its bank account can be investigated through legal procedure of the local government, and occasionally, it can be controlled or even frozen.

       Up to now, the US dollar has assumed such roles as the key currency, and global financial institutions have located their international settlement fund in the United States, and as a result, their assets have been under the American jurisdiction, and therefore, they have been monitored, or even sanctioned by the US authority. Money launderings are checked in this system, and everything is completely dependent on the United States.

       In my view, frustrations are growing in the financial community, because the key currency authority can control and surveil foreign financial institutions based on their own law.

       Notably, Mainland China detests that their assets are controlled and watched by the US jurisdiction, and therefore, they are proceeding to internationalize the renminbi gradually, and finally, they succeeded in including it into the Special Drawing Right (SDR) currency of the International Monetary Fund. China is pushing this furthermore.

       Meanwhile, Britain that draws worldwide attention due to Brexit, is strongly dismayed with a huge amount of penalties to British financial institutions charged by the US government, due to improper investigation of money laundering.

       I would argue that this is why Britain approved the inclusion of the renminbi into the SDR, and from now on, we have to bear in mind that Britain would admit internationalization of the renminbi at the London Financial Market, and help the growth of international transactions denominated in the renminbi. In view of closer partnership between British and Chinese central banks, I would like to keep an eye on the internationalization of the renminbi.

(This is the English translation of an article written by SANADA Yukimitsu, College Faculty Member, which originally appeared on the e-Forum "Giron-Hyakushutsu (Hundred Views in Full Perspective)" of GFJ on October 13, 2016, and was posted on "GFJ Commentary" as no.70 on December 19, 2016.)



For more views and opinions in the backnumber of "GFJ Commentary," the latest of which are as follows, please refer to: http://www.gfj.jp/e/commentary.htm

No.69: A Feedback to the Trilateral Dialogue of China, Japan and South Korea
        by IKEO Aiko, Professor, Waseda University
        (31 October 2016)

No.68: Shadow of Mr. Soros Behind the Helicopter Money Debates in Japan
        by TAMURA Hideo, Journalist
        (31 August 2016)

No.67: Can The Path Really Teach About the Good Life?
        by KURANISHI Masako, Political Scientist
        (28 June 2016)

No.66: Japan Should Hold and Secure "Potential Nuclear Capability"
        by KATO Seiichi, former attorney-at-law
        (12 April 2016)

No.65: Terrorism causes prejudice and discrimination against Muslims - the collective responsibility of Muslims
        by KURANISHI Masako, Political Scientist
        (25 February 2016)

No.64: The presence of U.S. and Russia lent weight to G20
        by KAWAKAMI Takashi, Professor, Takushoku University
        (16 December 2015)



"GFJ Updates" introduces to you the latest events, announcements and/or publications of GFJ.


Outline of Discussions of "The Dialogue with the World" on "The International Order in Europe and Asia-Pacific after the Ukraine Crisis and Japan's Course of Action"

GFJ organized "The Dialogue with the World: The International Order in Europe and Asia-Pacific after the Ukraine Crisis and Japan's Course of Action" in Tokyo on November 25, 2016, under the co-sponsorship of the Atlantic Council's Brent Scowcroft Center (BSC) of the U.S., Institute of World Policy (IWP) of Ukraine, and the Japan Forum on International Relations (JFIR).

Lively discussions were held in the three Sessions of "The Ukraine Crisis from the European Perspective" and "What the Ukraine Crisis Means to the Asia-Pacific."

For the Outline of Discussions of this "Dialogue," please refer to;
http://www.gfj.jp/e/dialogue/20161125_roe.pdf


International Symposium "After the July 12 PCA (Permanent Court of Arbitration) Verdict: The Future of Maritime Asia" Held

GFJ supported Meiji Institute of International Policy Studies (MIIPS) and Meiji Institute for Global Affairs (MIGA) in organizing International Symposium "After the July 12 PCA (Permanent Court of Arbitration) Verdict: The Future of Maritime Asia" on December 19, 2016, in Tokyo.

This Symposium was attended by 50 participants including Mr. TOKUCHI Hideshi, Senior Research Advisor of Institute for International Policy Studies, as the keynote speaker and such eminent experts on the theme as follows:

From the Japanese Side: Dr. ITO Go, Director of MIIPS / Professor of Meiji University and Dr. HATAKEYAMA Kyoko, Associate Professor of Kansai Gaidai University.

From the Overseas Side: Dr. David WALTON, Senior Lecturer of Western Sydney University (Australia), Dr. SONG Yann-huei, Research Fellow of Institute of European and American Studies, Academia Sinica (Taiwan), Dr. Virginia Bacay WATSON, Professor of Asia-Pacific Center for Security Studies (the U.S. / the Philippines), Dr. PHAM Lan Dung, Professor of Diplomatic Academy of Vietnam (Vietnam), and Dr. PHAR Kim Beng, Founder & President of Echo Strategic Insight (Malaysia).

Lively discussions were held in the two Sessions of "Situations 'after' the July 12 PCA Verdict" and "Views from Neighboring Countries."

For the conference material distributed at the Symposium, please refer to;
http://www.gfj.jp/e/dialogue/20161219_cpe-meiji.pdf