November 30 is sure to be a national holiday for a billion Chinese - it was on this day in 2015 that the yuan was included in the basket of reserve currencies by the IMF board of directors.
"Historic Event"
China's main news agency Xinhua has already called the IMF's decision a historic event: "The inclusion of the Chinese yuan in the Special Drawing Rights basket demonstrates China's real integration into the global financial system, will help deepen financial reforms and expand the capital market, and will advance the process of internationalization of the yuan, presenting even more opportunities Chinese and foreign financial institutions,” the agency writes.
It should be noted that China has long sought to bring its currency to the international stage - first as a means of payment, and then as a reserve currency. Analysts estimate demand for the yuan by central banks around the world at about half a trillion US dollars. It is also necessary to take into account the fact that global foreign exchange reserves have declined sharply since last year. Therefore, including the yuan in the list of reserve currencies consisting of the dollar, euro, pound sterling and yen will help correct the imbalance somewhat.
The yuan has already become an interregional currency
As of October 1, 2016, the yuan, strictly speaking, will not be considered a global reserve currency. It will still have to “grow” to this status, since in the understanding of the expert community, a currency becomes global when it is actively used in cross-border trade and its share is high in the reserves of central banks. Another important point— the ability to use currency during a financial crisis.
Currently, five “players” have secured reserve currency status, almost completely duplicating the SDR basket: the US dollar, euro, pound sterling, yen and Swiss franc.
“So nothing threatens the unchallenged reign of the dollar yet,” says expert.ru analyst Sergei Manukov. “But the emergence of a fifth reserve currency, given the size of the Chinese economy, could be the beginning of a weakening of the hegemony of the American dollar in the global financial system. In the nineties of the last century, on the eve of the emergence of the euro, the dollar accounted for 71% of all foreign exchange reserves, and now – 64%.
The share of the euro, due to the turmoil in the European economy, has decreased from 27.6% in 2009 to 20.5% now. The creators of the European currency a decade and a half ago dreamed of parity with the dollar and that the European currency would become a counterweight to the financial hegemony of the United States. However, the deep debt crisis in Europe confused the cards for the fathers of the euro.
the inclusion of the yuan in the basket of reserve currencies will occur mainly due to the weakened European currency, and not the dollar
In general, the yuan has been gaining weight in the international arena for several years now. It has overtaken the yen to become the fourth means of payment, accounting for 2.8% of global payments, SWIFT said in an August study. This, by the way, is not so much, taking into account the size of the Chinese economy. However, the growth rate of the yuan's share in global payments, which was only 0.8% in 2012, is impressive.
However, the turbulent events in the Chinese financial market at the end of summer showed that the yuan is still very vulnerable - it looks like a nimble baby taking its first steps. Already in a September study, SWIFT analysts emphasized that it had again fallen to fifth place and that its share in global payments had dropped to 2.5%. It is now behind the dollar (43.3%), euro (28.6%), British pound (9%) and yen (2.9%).
Over time, the yuan will overtake the pound and become the third currency on the planet. However, no financier can now name the date when he will throw down the gauntlet to the dollar.
Before them is a clear example of the euro, which tried to compete with the dollar. Everyone knows how it ended,” concludes Sergei Manukov.
Global dedollarization
It is characteristic that the advancement of the yuan to the status of a new reserve currency coincided over time with the activity of the world association BRICS, which could become an alternative to the existing economic hegemony of the United States. According to the famous American economist, former employee World Bank Peter Koenig, “the first step towards crushing the dollar as a world currency will be the Development Bank created by BRICS.”
The BRICS countries are taking the first steps towards global de-dollarization
As Peter Koenig notes, BRICS accounts for 30% of global GDP and approximately 45% of the world's population. And this is a real threat to US interests. “It is truly time for a new monetary and economic system to replace today's World Bank, which is a kind of giant casino, Wall Street dollar project,” Koenig said.
Today, just 6 American banks manage two-thirds of all banking assets in the world
Benefits for Kazakhstan
Finally, it must be said that the yuan has been a “reserve currency” for several years regional significance" As the portal has already written, many countries around the world have long used the yuan as a reserve currency. The priority here belongs to the National Bank of Belarus (NBB). Back in September 2007, the NBB announced the inclusion of the yuan in its gold and foreign exchange reserves. According to various sources, the Central Banks of Malaysia, South Korea, Cambodia, the Philippines and Russia have some volumes of yuan in their reserves.
As for Kazakhstan, as Pavel Deryabin, an analyst at the investment company IT Invest, rightly noted in an interview with the agency, the PRC can become a saving haven for Kazakhstan: “At the moment
China's economy is still growing at over 6% per year, the highest among advanced economies
China could become a kind of additional safe haven if a new economic crisis breaks out in the United States or Western Europe.” According to the expert, a significant advantage of storing reserves in yuan is the diversification of Kazakhstani assets. In addition, according to him, the yuan exchange rate can theoretically rise against the dollar and the euro, and accordingly, a positive revaluation of the portfolio is possible.
Tajikistan has already introduced the yuan into circulation
December 2, 2015 N The National Bank of Tajikistan announced that in order to curb the exchange rate of the American dollar in the country, 1 million yuan will be put into circulation, reports azattyk.kg. Chairman of the National Bank Jamshed Nurmuhammadzoda announced this at a meeting of the Majlisi Namoyandagon (lower house of parliament) of Tajikistan.
According to him, this measure will allow entrepreneurs importing goods from China to exchange the national currency for Chinese currency.
In September of this year, Tajikistan and China signed an agreement according to which Tajik entrepreneurs have the opportunity to freely exchange Tajik somoni for the Chinese yuan to import goods from China. In accordance with this agreement
The Chinese side undertakes to allocate about 3 billion 177 million yuan to Tajikistan over the next three years, which is about $500 million
Over the past week, many Tajik entrepreneurs have suffered losses as a result of exchange rate fluctuations in the US dollar. The unofficial exchange rate of the US dollar in the last few days at currency exchange offices was 7 somoni 40 dirams per dollar. In general, the dollar exchange rate in Tajikistan increased from 5 somoni 15 dirams in September last year to 7 somoni 40 dirams at the end of November 2015.
11/10/2014 at 6:47 pm, views: 14404The share of the Chinese national currency in international trade is growing year by year and has now reached almost 9%. Many experts predict that the day is not far off when the yuan could become a regional reserve currency in the Asia-Pacific region, significantly displacing the US dollar. However, China is in no hurry to let the yuan float freely.
“Settlements in rubles and yuan are very promising. This will mean that... the influence of the dollar in the global energy sector will objectively decrease. This is not bad either for the global economy, or for global finance, or for global energy markets,” Vladimir Putin said yesterday in Beijing. He spoke primarily about payments in rubles for Russian energy supplies supplied to China.
Politically everything is clear, but economically? From the point of view of the world economy, what is the ruble backed by? First of all, oil and gas. This means that the ruble has the “prospect” of becoming the currency of payment only for these goods. But only in local markets, because, unfortunately, the chance to become an energy superpower of the 21st century is not with Russia (Putin set such a goal at the end of 2005, which is no longer remembered today), but with the United States, which is rapidly increasing its production oil and gas - and not through the development of strategic reserves, but through the development of new shale technologies; Russia is having great difficulty maintaining the achieved level of oil production. So even the energy sector, a seemingly Russian domain, is becoming increasingly inconvenient for our suppliers. Sanctions also play a role, which specifically target the prospects for the development of the Russian fuel and energy complex, depriving it of the technologies necessary to advance to the Arctic shelf and other fields, the development of which requires the most modern technologies. All this reduces the ruble’s chances of strengthening its position even in the CIS, although here it is still unrivaled.
If we return to the yuan, then it has a clear chance of moving up in the world rankings. Firstly, this is a growing and increasingly solvent domestic market; secondly, it has almost limitless export potential: China has firmly mastered the role of the modern “factory of the world.” Thirdly, this is a huge, and not only economic, influence in the countries of Southeast Asia, which were not called “tigers” for nothing. We are talking about the Chinese diasporas, which are the conductor of Beijing's policies.
China is actively expanding the duty-free zone for its goods in the Asian region. Literally, a similar zone has just been agreed upon, for example, between Beijing and Seoul. Another example can be given: at one time, Malaysian officials directly approached China with a proposal to create a monetary union under the auspices of the yuan.
So what is stopping the yuan from officially becoming a regional currency to begin with? Policy. The yuan is not yet a freely convertible currency - its exchange rate, naturally, taking into account the market, is determined by the People's Bank. And he is in no hurry to let go of exchange rate policy. Because the undervalued (as they say in the USA) yuan exchange rate is an incentive for Chinese exports. Beijing is in no hurry to give the yuan to the market: in the hands of the People's Bank, it better fulfills the tasks at hand.
The second important factor is Sino-Japanese relations. There was a time when the option of a monetary union between these Asian economic titans was discussed at the expert level. I even jokingly suggested a name for such a common currency: the yuan. But now the degree of geopolitical relations between Beijing and Tokyo is not conducive to such plans.
Beijing is in no hurry. He has never been in a hurry since the Great Leap Forward. And this is a wise policy. China does not look at the world through rose-colored glasses. And perhaps he believes that the time has not yet come to pose a decisive challenge to the United States in the foreign exchange market. After all, if we think seriously, squeezing the United States in the foreign exchange market of potentially powerful Asia is a geopolitical challenge fraught with the most serious consequences.
Confucius is revered in Beijing, and one of his most famous aphorisms is: “Sit quietly on the bank of the river, and the corpse of your enemy will float by.”
HELP "MK":
According to the international interbank system SWIFT, as of February 2014, the share of the yuan in global payments and settlements was about 1.5%. Not bad, considering that a year earlier this figure was 0.63%. The yuan rose to seventh place, ahead of the Swiss franc. The first two places are still confidently occupied by the euro and the US dollar.
The volume of the Chinese currency in international trade settlements is even more impressive - 8.7%. This is not surprising, given the scale of China's foreign trade turnover. The largest volumes of yuan trade were recorded in Hong Kong, Singapore, and London. However, the dollar has no competition here with a share of 81%. The gap between the positions of the yuan and the dollar is gigantic, but the accelerated positive dynamics of the Chinese currency is beyond doubt.
One of the obstacles to the rapid expansion of the yuan in the world is the lack of the Chinese national currency among trading partners. Additional means of stimulating such a transition were the so-called currency swaps (this is a transaction that involves the simultaneous purchase and sale of a certain amount of one currency in exchange for another with two different value dates - “MK”). Today, the People's Bank of China has entered into currency swap agreements with dozens of countries. It is expected that this will be done with the Bank of Russia in the very near future. However, in the summer of 2014, VTB and the Bank of China already signed an agreement on settlements in rubles and yuan without first converting them into dollars. So far, VTB has become the only domestic credit organization to receive market maker status on the Chinese currency exchange. The manager of the VTB branch in Shanghai, Alexander Milyukov, told MK: “If in 2013 on the Chinese Currency Exchange, VTB’s sales volume for the ruble-yuan pair reached 19 billion rubles, then as of October 1, 2014, 50 billion rubles had already been sold. In recent months, trading volumes have increased significantly: 3-4 billion rubles are traded daily. Obviously, we will soon see this money in calculations. The business is preparing adequate liquidity for payments under foreign exchange contracts on which agreements have already been reached.”
However, in the medium term, the yuan is unlikely to become a full-fledged reserve currency even within the Asia-Pacific region. “Firstly, China has ambiguous political relations with most neighboring countries: Japan, Vietnam, India, Thailand, Taiwan. - says Vasily Solodkov, director of the Institute of Banking at the Higher School of Economics. - There are territorial disputes with some of them. Therefore, the international financial policy of the Celestial Empire is built on the basis of bilateral agreements such as: China-Russia, China-Indonesia, China-Malaysia, China-Singapore, etc.
Secondly, today the yuan does not have the characteristics of a reserve currency - free conversion, floating exchange rate. The National Bank of China strictly regulates the exchange rate of the yuan, which is significantly undervalued against the dollar. The Chinese do not yet want to let their currency float freely, as this will lead to a decrease in the competitiveness of their export goods. Finally, the traditional disadvantage for the yuan is that China's political system is not democratic enough. Legislation and courts are not transparent.”
Despite good condition and the continued positive dynamics of the PRC economy, the Chinese yuan has not become a world reserve currency, like the US dollar, euro, British pound, Japanese yen and Swiss franc.
The Germans want the yuan
However, all this does not detract from the interest in the Chinese currency and an increasing number of countries are considering the possibility of using the yuan to place their reserves.
As Bloomberg reports, the Federal Bank of Germany (Bundesbank) has decided to include the Chinese yuan in Germany's international reserves.
The yuan is increasingly used as foreign exchange reserves of central banks, for example, the ECB has included the yuan in reserves, and other European central banks have also done so, said Andreas Dombret, a member of the board of the Bundesbank.
According to him, this decision was made after the European Central Bank (the Bundesbank is part of it) invested 500 million euros in assets denominated in yuan.
According to the expert, the fact is that real indicator The demand for a currency is the use of this currency in international payments. In 2015, the share of settlements in yuan, according to the International Interbank Information Transfer and Payment System SWIFT, was about 3%, which made everyone talk about the bright prospects for the yuan after the IMF decision.
However, after this, payments in yuan for some reason did not begin to grow, and even decreased to 1.5% at the end of 2017. Why? - asks Altynov. - But because the desire to declare one’s status is not enough. A place in international trade and world settlements still needs to be won. Meanwhile, participants in this very trade have so far been skeptical about the Chinese currency. For example, due to the insufficiently free nature of its exchange rate formation. It is no secret that the Chinese Central Bank uses manipulations with the yuan to solve its macroeconomic problems. And China's still relatively closed economy makes it possible to do this. Again, it is no coincidence that one of the US accusations against the Celestial Empire is a complaint about the currency. Thus, the news about the Bundesbank’s decision is just another step for the yuan towards its recognition, but nothing more. Yuan has no place here
Indeed, in October 2017, the share of the Chinese currency in international payments decreased to its lowest level since April 2014. According to payment system SWIFT, in October last year it fell to 1.46% from 1.85% in September. Which suggests that the peak of confidence in the yuan was the moment it was recognized by the IMF, after which its share of its use decreased by almost half.
Today the yuan ranks only 7th among the most popular world currencies.
The undisputed leader in world payments and reserves today is the US dollar, occupying 39.47% of the market. The second most important participant, the euro, is actively increasing its share. Its share in global payments is 33.98%. It is followed by the British pound sterling - 7.71%, the Japanese yen - 2.92%, and the Swiss franc - 1.63%.
Despite the fact that some countries, including Germany, are not against placing part of their reserves in yuan, in the foreseeable future it is unlikely to be included in the list of the world's main reserve currencies.
Every year, more and more analysts come to the conclusion that the US dollar faces an unpleasant future. Could the American currency simply depreciate at some point? The reason is that the whole world accepts dollars for payment only because America is recognized as a leading world power. But how is this leadership supported? The US currently owes the world $21 trillion (the size of ). What happens if the green paper actually starts to depreciate? Is there a currency that can replace the dollar? According to experts and analysts, the Chinese yuan can take on this role.
Why is the future world currency called the yuan?
There is talk, including in the United States, of abandoning the dollar in international payments. According to American billionaire Jim Rogers (“a Wall Street legend,” as he is called), the dollar will lose its position in the near future. America's global leadership, Rogers believes, is based on nothing.
Interesting fact: The international currency designation in the ISO 4217 standard is CNY. The average exchange rate of the yuan against the ruble today: 1 CNY is equal to approximately 10 RUB.
The dollar based system is simply unfair. This currency is not backed by anything. By printing dollars, the United States exchanges them for goods manufactured in other countries, including energy resources. Any product is the result of the labor of specific people. Can such a system last as long as the owners of money want? Of course, sooner or later the hour will come when the need to reformat the system arises.
Why is the yuan called the future world currency? First of all, because at present the economy of the Celestial Empire is considered second. But, according to some assumptions, she has long been the first. And if this is so, then the Chinese currency cannot be unclaimed in the world. One example confirming this is oil trading on the Shanghai Exchange, which began in the spring of 2018. True, it is too early to talk about any serious volumes in this case. But, “hard trouble is the beginning.”
The Chinese leadership is capable of making the yuan a global currency. This option will be immediately supported by other countries. But does Beijing need this? According to Said Gafurov, head of the GDP Research Center, China is not interested in such a status for its currency.
The status of a world currency provides for the possibility of influence on the country's monetary policy by foreigners. The fact is that a reserve currency is still a huge obligation that must be fulfilled.
1 US dollar to Chinese yuan exchange rate chart
America maintains its role as a world leader, along with its obligations regarding the role of the dollar, thanks to its own, often aggressive, policy and power “”. China is pursuing a different foreign policy. He acts more carefully and accurately. Of course, turning the yuan into a global currency provides an opportunity for additional benefits. But at the same time, relationships with other countries may become more complicated.
An example of this is the euro; according to citizens of European Union countries, the European Central Bank is largely to blame for the decline in their living standards.
Chinese currency serves the real sector of the economy
Currently, China prefers to improve and develop relations with other countries. A simple example: the Celestial Empire has had economic cooperation with Australia for a long time. China supplies machinery and equipment there, purchasing alumina, coal and other similar goods in return. In such conditions, he may not use American currency. It is easier and more profitable to trade for yuan and Australian dollars. Similarly, when trading with Russia, Beijing is better off using the ruble-yuan pair.
Of course, making a big profit by issuing your own reserve currency means getting an additional effect. But Beijing has other goals. The country's economy is largely focused on domestic consumption. We are talking about transforming the country. Some of the citizens, and we are talking about hundreds of millions, have no relation to the global economy. For example, the vast majority of peasants feed themselves, limiting themselves to minimal purchases. Agriculture is a vital industry in China, employing more than 300 million farmers.
Currently, China is increasingly reforming its social structure. Thus, due to the construction of the Three Gorges hydroelectric power station, more than a million people became city dwellers. Now they work not on the land, but in enterprises. The importance of such changes is higher than the profit that the printing press will provide. Taking risks to gain profit through speculation is simply unacceptable for Beijing. It is much better to develop the country's real economy.
As for international trade, China is gradually switching to currency pairs in mutual settlements, thereby reducing its dependence on the dollar.
Interesting fact: One yuan is divided into 10 jiao (角). Jiao are divided into 10 fen (分). For example, the amount of 3.14 yuan is pronounced 3 yuan 1 jiao 4 fen (三元一角四分). In circulation there are coins in denominations of 1, 2, 5 fen, 1 and 5 jiao, 1 yuan.
There is one more plus here. The use of currency pairs contributes to the development of real economies, pushing the financial economy, including speculators, into the background.
The United States does not need this path. Abandonment of the dollar means abandonment of American accounts. As a result, America's banks are losing money. The US response can only be aggression, of course, not necessarily expressed in the use of military force.
What could a trade war between the US and China lead to?
The trade war launched by America against China (however, Washington is trying to inflict economic blows on its allies) is affecting both sides. However, China is in a slightly better position in responding to attacks with tariff increases.
With its responses, Beijing not only damages the American economy, but also at the same time finds new suppliers. Other companies are entering the Chinese market instead of American ones. In addition, the United States cannot in any way influence the ongoing Silk Road program. It is in no way dependent on Washington, since it in no way affects US territory.
But Beijing still has one more rather thorough move left in stock. We are talking about the devaluation of the yuan. According to investor Jim Rickards, who shared his forecasts in The Daily Reckoning, this is the only thing that remains for the Celestial Empire.
The investor operates with the following figures. US export volume is $150 billion. Introduced – 200 billion. If China devalues the yuan by 25 percent, the country will be able to maintain its current rate of economic growth. But devaluation will affect the economies of several countries at once.
China's attempt to devalue its currency in 2015 crashed the American market. The drop exceeded 10 percent. If the devaluation scenario repeats, the collapse will affect not only the United States, but also most Asian economies.
China is teaming up with major oil-producing countries as it prepares for
Washington understands what the devaluation of the yuan could mean, first of all, for the United States. America does not need such a development. Perhaps in an effort to prevent an undesirable scenario, accusations of using the yuan in the trade war are coming at Beijing from the White House with relative regularity.
However, for many years, without encountering any serious resistance from the countries against which the United States imposed sanctions, Americans simply forget that in addition to exchange rates and the financial economy, there is also a real economy.
A trade war could freeze US LNG export projects. Moreover, the matter is not limited only to some factories or other objects. Everything is much more serious.
Interesting fact: From 1994 to July 2005, the yuan was firmly pegged to the United States with an exchange rate of 8.28:1. Only on July 21, 2005, the PRC abandoned the peg of the yuan to the dollar and raised the exchange rate of the national currency by 2%. Now the dollar exchange rate against the yuan is on average: 1 USD = 6.85 CNY.
It turns out that Beijing, which is in a tough confrontation with Washington, is beginning to dictate its own terms to it. At the same time, the latter is not helped either by a powerful “war machine” or by the Fed’s ability to print as many dollars as needed to cover all expenses. There are, of course, other tools, but their usefulness is now almost zero.
It turns out that the world reserve currency is losing to the yuan. The reason is that the American currency provides financial markets, the Chinese currency provides the real sector of the economy. At the same time, the yuan is gradually becoming increasingly important in trade between countries, displacing the dollar.
The basket of currencies of the International Monetary Fund was replenished on November 30 with a fifth monetary unit. The Chinese yuan joined the US dollar, euro, Japanese yen and British pound sterling. For the first time in financial history, a currency that is not even freely convertible has been recognized as a reserve currency.
China took a long time to achieve this. Corresponding calls from the country's leadership intensified in 2009, amid the global financial crisis. China went through the crisis much easier than other major economies in the world, maintaining fairly high growth rates. At the same time, China overtook Japan, becoming the second largest country in the world by GDP and the third largest currency area (after the United States and the eurozone).
At the same time, they raised the problem of revising quotas for individual countries in the IMF. By the end of the first decade of the 21st century, developing countries sharply increased their weight in the world economy and demanded more rights for themselves in decision-making in the world's main financial institution. The foundation itself supported the idea and completed all the necessary documents. However, the matter stalled in the US Congress.
By accepting the yuan into the club of reserve currencies, the IMF compensated China for the delay in increasing quotas (it is China that looks like the most affected party in this story, since its contribution to world GDP is much greater than that of others developing countries). At the same time, if the decision on quotas seemed obvious, then with the basket of reserve currencies it is not so simple.
The yuan is still not a freely convertible currency in the classical sense of the word. Until recently, there were strict restrictions on the use of yuan abroad, and the exchange rate was very tightly controlled, although the country's financial authorities now allow it to fluctuate on the stock exchange. Beijing has established swap lines with the central banks of other countries, stimulating transactions in the relevant currencies. However, capital controls remain. According to plans published last month by the People's Bank of China, it is expected to be abolished only by 2020.
For China, its financial system and the yuan, not much will change at first. Inclusion in the reserve basket means the currency can be freely exchanged for the IMF's Special Drawing Rights (SDRs). There are not many goods and services denominated in SDRs in the world, and accordingly, the demand for the currency that companies need to hedge such transactions is relatively small. An exception can only be paid for the passage of ships through the Suez Canal, which is valued specifically in SDR. In general, one should not expect a sharp increase in capital inflows into yuan or assets after the IMF decision comes into force (this will happen in the fall of 2016).
Photo: Zhengyi Xie / Zumapress / Global Look
Rather, the situation is the opposite: in the near future the yuan will become somewhat cheaper. The main reason for this is relatively weak economic statistics and a reduction in the country's positive balance of payments. In addition, the rules for trading yuan have changed. Now the People's Bank of China, as well as abroad, sets at the start of trading the price that was set by the last deal of the previous day. This is what previously led the yuan to depreciate by 2 percent. Let's also not forget about the prospect of raising the US Federal Reserve's discount rate, which could cause an outflow of capital to America from other continents, and primarily from emerging markets.
Interestingly, China this time chose to spend several hundred billion dollars of its reserves rather than allow its currency to weaken too quickly. In the old days, he would have also helped her devaluate. Now everything is different. Firstly, Beijing is betting on a rise in domestic demand and a gradual shift away from the traditional model of an export economy, which the weak yuan is likely to hinder. Secondly, the United States is now looking very carefully at all the actions of the PRC with its own currency. Washington will categorically not like a strong devaluation of the yuan. And they are definitely not going to figure out whether this is a natural or artificial devaluation.
Be that as it may, the People's Bank plans to gradually devaluate the yuan by another 3-5 percent over the course of the year. This will be enough not to weaken domestic demand, and it will not anger America. On the other hand, it will be possible to more or less follow market trends without burning through gold and foreign exchange reserves.
The long-term prospects for the yuan are much more interesting and less predictable. Much depends on how China uses its currency in its own international trade transactions. The share of the yuan in China's trade with the outside world is growing - from zero in 2010 to 25 percent in 2014. At the end of 2015, this figure is expected to increase to approximately 30 percent.
As the circulation of the yuan in China's trade transactions increases, so will the demand for it in other transactions. Of course, full convertibility will be required. However, there is no doubt that the PRC will move in this direction. And given that the Chinese economy could reach 20 percent of the global economy in the next 10 years and be on par with the US at current exchange rates, the potential demand for the Chinese currency is enormous.
However, you need to understand that the dollar is popular not only because of the size of the American real economy. The demand for it is ensured, among other things, by the huge size of the financial market and, accordingly, the liquidity that circulates on it. An investor can come to the United States at any time and choose any type of securities to his liking. In Europe this is somewhat more difficult, and in China it is even more difficult due to various restrictions. So it’s too early to say that the yuan will replace the dollar. But China’s entry into the elite club of the world’s great financial powers on November 30, 2015 certainly took place.
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