The Chinese yuan may overtake the U.S. dollar as the world’s leading reserve currency. That is what the respondents at State Street and Economist Intelligence Unit think. Most of international experts shared the view that the yuan may fully replace the U.S. dollar as the major reserve instrument. Among the investors working outside China, 53 percent support such a view, while China-headquartered institutions are even more optimistic with 62 percent.
"As China's economic influence grows, the global importance of the renminbi (yuan) will become magnified. Indeed, while for decades it has been a 'greenback world', dominated by the US dollar as the world's primary reserve currency, many think a 'redback world', in which the renminbi enjoys premier status, is increasingly a possibility," the survey’s authors concluded. Some ECB’s members, for example Yves Mersch, believe that yuan has a firmer footprint internationally. Russian Prime Minister Dmitry Medvedev also believes in the yuan’s financial prospect. “While our Chinese friends have not made a decision on the introduction of convertibility, but once they do, you can rest assured all present and absent States will nominate their reserves already in the yuan,” –he said at the International Investment Forum of the CIS in 2012. However, sceptics’ reasons are also sound. They are sure that the yuan may lack liquidity for all classes of assets.
Moreover, market players’ confidence in this unit is also doubtful. Still there are many of those who do not trust the yuan as a store of value. Nevertheless, both parties agree that in case this scenario is valid, it would not be implemented for 10 years from now. Most experts think that the Chinese government will accelerate the process of the yuan’s liberalization. If it is successful, the status of the world’s reserve currency is just around the corner!
