Is the Yuan already a reserve currency?

Investment Analysis Clubs Macro Economic Trends and Risks
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This video makes a case (Not THE case) that the Yuan is a reserve currency. The man has been in China since 2012 and has a business in China. He is pro China, if he weren’t si obviously Christian I would consider him a CCP mouth piece However, he seems to be pretty level headed and fact based. His research for each video is available on Substack.

China’s central bank has currency swap agreements with dozens of countries, and trillions of dollars in goods trade are now settled in renminbi.

The US Dollar remains the dominant reserve currency globally. But a severe shortage of dollars in many systems opens the door to Chinese companies, who can transact business outside the USD.

BRICS expansion is another driver of the internationalization of the RMB, along with the urge of many countries to de-risk from Western banking systems.

Closing scene, Ganzhou, Jiangxi

Resources and links:

Bilateral Currency Swap Agreements and Local Currency Trade Settlements
https://www.newscentra…

Comments on the use of the Chinese yuan as an international payment currency
https://www.stonex.com…

“. China’s central bank has currency swap agreements with dozens of countries, and trillions of dollars in goods trade are now settled in renminbi.

The US Dollar remains the dominant reserve currency globally. But a severe shortage of dollars in many systems opens the door to Chinese companies, who can transact business outside the USD.

BRICS expansion is another driver of the internationalization of the RMB, along with the urge of many countries to de-risk from Western banking systems.

Closing scene, Ganzhou, Jiangxi

Resources and links:

Bilateral Currency Swap Agreements and Local Currency Trade Settlements
https://www.newscentra…

Comments on the use of the Chinese yuan as an international payment currency
https://www.stonex.com…

China’s plan to internationalise yuan quietly takes a step forward as Zambia gets on board
https://www.scmp.com/n…

What China’s yuan internationalisation push looks like – and what may hold it back
https://www.scmp.com/e…

China’s central bank signs 40 currency swap agreements with foreign counterparts
https://english.www.go…

3 Likes
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The RMB has been the third most powerful reserve currency for a few years now. The EUR will exceed the USD in the next decade.

If we default the Chinese will try to exceed, but the country has more government debt in relative terms than we do. Their government may be sucked into defaulting.

BTW I want a factory buildout and higher taxes, but if we are going to default many factories will be shuttered. Now might not be the time for a factory buildout. Ya think?

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There’s a simple answer to the thread title: No, it’s not. It’s not close. It’s not in the same neighborhood, it’s not even in the same town or state. It’s miles and miles and miles down the highway.

Use of currencies as reserve currency:

US Dollar: 59%
Euro: 20%
Yen: 6%
Pound: 5%
All other currencies (this includes the reminbi, as well as the kroner, the swiss franc, the canadian dollar, the australian dollar, the korean won, and others): 10%.

(2024 figures) from the Council on Foreign Relations & the Atlantic Council

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The CNY is not third, my bad, but it is emerging through trade.

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All the links are broken, so hard to evaluate the claims but I’m pretty skeptical.

Given the erratic political and economic policies of the US government, it is certainly prudent to find ways to circumvent the USD and US banking system in general.

But bottom line is that China strictly limits access to its capital markets. I don['t see how the Yuan is a serious contender for a reserve currency unless/until that changes.

4 Likes