This isn't going to happen. Nothing to see here, move along.
Not going to happen any time soon.
A reserve currency requires faith in the bank behind it. The Fed has that faith from the markets. China's central bank does not. Furthermore, a reserve currency has to float without restrictions. The Yuan does not, nor will it in the conceivably future as the PRC ensures a stable currency to ensure a stable economy. PRC's only real claim to legitimacy is economic growth as their political repression forbids real democracy. Furthermore, China's currency has not stood the test of time where the dollar has.
China has a long way to go before it's even rationally conceivable that it could replace the dollar as a reserve currency.
The only reason the USD is the reserve currency is because we export the most currency of any nation. Why do we export dollars and how? we buy things from other countries. The status of being a reserve currency is meaningless.
well... so far it has allowed us to get lots of cool manufactured stuff and materials and labor in return for little pieces of green paper.
the main critique i would interpose here is that "global" is a very different story from "regional".
Still shouldn't matter. China's central bank has not demonstrated it is trustworthy. And the political interests of the PRC do not necessarily match with what people globally or regionally are looking for in a reserve currency.
Our reserve status hasn't allowed that, you are confusing the effect (reserve status) with the cause (ability to buy stuff, international trade agreements, etc..).
It does matter, especially when talking about economic dominance and relative levels of trust. For a Cambodian going to visit his relatives in Vietnam, Chinese currency might (in a near-term future where SE Asia is dominated by China) make perfect sense.
Worth noting is that the first step (divestment from the dollar as a means of exchange) is already occurring between China and several of its trading partners.
But perhaps you can point to the varying actions that have equaled such trust for the fed and distrust for the PBoC in the region?
It does matter, especially when talking about economic dominance and relative levels of trust. For a Cambodian going to visit his relatives in Vietnam, Chinese currency might (in a near-term future where SE Asia is dominated by China) make perfect sense.
Worth noting is that the first step (divestment from the dollar as a means of exchange) is already occurring between China and several of its trading partners.
But perhaps you can point to the varying actions that have equaled such trust for the fed and distrust for the PBoC in the region?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?