RT: Chinese Yuan may replace dollar as world's reserve currency

Published: 18 November, 2011, 23:46

Tensions between Beijing and Washington intensified this week as international leaders met to discuss the handling of the South China Sea. As America attempts to involve itself in the region, China is asking Obama and company to butt out.

And while once a force to be reckoned with, American dominance may be threatened more than ever as economists predict that the US dollar will be usurped by the Chinese yuan in only ten years’ time.

In its latest report to Congress, the U.S.-China Economic and Security Review Commission predicts that the yuan, also called the renminbi or RMB for short, could compete against the American dollar as the world’s reserve currency in a matter of only a decade. As China has pushed their currency outside of its own borders in recent time, the panel predicted to Congress that I could be just a matter of time before the US dollar loses its power as China becomes the world’s economic superpower.

"Chinese financial authorities are laying the groundwork for these ambitions via a series of bilateral arrangements with foreign companies and financial centers," the Commission says in their report. "While dollar-denominated financial markets retain a substantial advantage over their RMB-denominated counterparts in terms of new issuances, the RMB markets have made remarkable progress in less than one year," the add.

In his new book, Eclipse: Living in the Shadow of China's Economic Dominance, economist Arvind Subramanian writes that that “Chinese economic dominance is more imminent and more broad-based – encompassing output, trade and currency – than is currently recognized.”

At one time the British pound sterling was the world's reserve currency but the dollar replaced it. Instability in US financial markets could make the Yuan attractive as an international currency.  


This would be a supreme irony if the currency of a communist nation was used as the world's reserve currency. 


The US would no longer be able to print money without creating inflation if this happened. 

See the complete article at http://rt.com/usa/news/dollar-china-yuan-sea-703/

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