China's yuan has “a long way” to go before it comes anywhere close to challenging the U.S. dollar’s status as a reserve currency. A number of “almost abstract” conditions, including not having too much leverage in the system as well as the rule of law, need to be met before a currency can achieve reserve status, the strategist said. He was also skeptical about arguments that the People’s Bank of China’s digital currency will be the “magic potion” that allows the greenback to be knocked off its position as the world’s reserve currency. The digital yuan is part of China’s push toward becoming a cashless society and is issued and controled by the country’s central bank. “Yet the dollar is an increasing proportion of the settlement of international trade and an even bigger proportion of financial reserves.”

Source: The Standard November 03, 2020 07:18 UTC