``It’s going to take several years for the renminbi to overtake the dollar, euro, and yen as a serious contender for the world’s main reserve currency… but it can happen. The major roadblock is that China’s renminbi is not free-floating– the government has imposed severe exchange controls... China’s government has been very clear that by 2020, it wants Shanghai to be a leading global financial center… and Chinese policymakers know that for Shanghai to be a financial center, the renminbi must be freely convertible.''

It is inevitable that the Chinese economy and Chinese currency have a significantly bigger slice of the global financial pie (consider that China has 4x the population of the US). That greater role is coming, despite China's drawbacks. An interesting twist, not discussed in the post, is that China is likely to introduce some sort of official (or unofficial) monetary role for gold as it tries to make the renmimbi a trustworthy currency.

Comments: Be the first to add a comment

add a comment | go to forum thread