Can the Chinese Yuan Become a Global Currency?
A Chinese economist believes that the yuan has the potential to become a global currency on par with the U.S. dollar and the euro. Here are the key points:
- The Chinese yuan is already the third-largest international currency after the U.S. dollar and the euro.
- To achieve currency parity by 2035, three conditions are necessary: a strong industrial system, deepening domestic financial markets, and progress in yuan internationalization infrastructure.
- A report from Renmin University suggests that China should pursue more free-trade agreements and actively participate in digital trade rules and global economic governance to promote the yuan’s overseas use.
- While some experts doubt that the yuan will replace the U.S. dollar as the world’s reserve currency, more countries are switching to trade in Chinese yuan.
Hot Take
The Chinese yuan has already made significant strides in the international currency market, and with continued efforts, it could potentially challenge the dominance of the U.S. dollar and the euro. However, it remains to be seen whether it can truly achieve currency parity by 2035. Nonetheless, China’s active participation in trade agreements and its focus on digital transformation give the yuan a strong foundation for future growth.
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