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Chinese Push for Reserve Currency Status

Chinese Push for Reserve Currency Status

China has, in recent weeks, been pushing for its currency, the yuan (or renminbi – the people’s currency) to become one of the world’s reserve currencies. The International Monetary Fund (IMF) has been visiting the country this week to ascertain whether the yuan is viable to be added to the currency basket – a group of IMF-endorsed reserve currencies, achieving equal status with the dollar, the yen, the euro and pound sterling. China has revealed plans to open up their domestic financial markets on a global scale, with the People’s Bank of China (PBoC) publishing a list of proposals to enable this.

Included in its proposals is the granting of access to foreign central banks and other investors to the Chinese bond market. Foreign institutions will be able to sell their yuan-denominated debt, and give Chinese companies the opportunity to issue overseas bonds. China will also free up limits on their companies and individuals to be able to invest in foreign assets.

The balance of world financial power seems to be moving eastwards. Following the Asia Infrastructure Investment Bank’s introduction, and the likely inclusion of the yuan in the currency basket of the IMF, the U.S.’s global standing appears to be seriously weakened of late. If this is of concern to you as America tries to resurrect its domestic economy, please Like & Share this post.

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