The US Fed has chosen to keep short term interest rates nearly to zero for an extended period of time. In effect, what has happened is that it has sounded the death knell for a US bank savings account. At present rates which are prevailing in the US market , the account is incapable of even preserving one's purchasing power.Amidst such a scenario, US citizens are forced to invest in risky assets like equities and commodities. This is because of the reason that US saving Bank account will not even give a return where in you can save your own purchasing power. However, these remain extremely volatile in the near term and carry a strong possibility of a permanent capital loss. But now, there's some ray of hope we believe. And it comes from the most unlikely of sources, China. As per Moneynews, The Bank of China is letting Americans invest upto US$ 20,000 a year in Chinese Yuan. In other words, the Americans can have their own Yuan denominated bank account. These will offer two benefits what I believe. First, interest rates would certainly be higher than what one gets in the US and secondly, there is a strong possibility of a capital appreciation as well what with the Chinese currency being significantly undervalued. This is one Chinese association which would be without its fair share of controversies what I believe. This will help the US citizen to get more return on their Investment without a risk factor involved into it. Secondly the Chinese economy will get a good number of investors from US which will increase the inflow of USD into their market.Let's check it out that how this move of China is going to work out and will it be really beneficial for the Chinese government to take such decision.
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