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China Lacks the Will to Usurp the U.S.'s Global Currency Dominance

MIN READNov 2, 2020 | 20:55 GMT

An image shows Chinese renminbi banknotes.

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Renewed efforts by China to internationalize its currency are aspirational for now, and while such moves could erode U.S. dollar (USD) dominance over time, Beijing currently lacks the political will to make the fundamental economic and political reforms necessary to put the renminbi (or yuan) in the same league. Among the changes needed to seriously challenge the U.S. dollar would be an open international financial account (previously the capital account) of the balance of payments; a fully floating and not managed exchange rate; full foreign access to China’s domestic asset markets with legal delineation of property rights; and cntral bank independence from the central government and the Chinese Communist Party (CCP)....

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