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Bloomberg/Staff/4-18-2021
“China sought to allay fears it wants to topple the dollar as the world’s main reserve currency as Beijing makes bigger strides in creating its own digital yuan. People’s Bank of China Deputy Governor Li Bo said the goal for internationalizing its currency is not to replace the dollar, and the efforts to create a digital yuan are aimed at domestic use.”
USAGOLD note: Not sure what to make of these comments……They do not square with the prevailing opinion that China would very much like to make the yuan a challenger to the dollar. Last fall, Morgan Stanley issued a report stating that the yuan makes up about 2% of international reserves at the moment and predicted that it would account for 5% to 10% of reserves by 2030. In short, if the yuan is a challenge to the dollar for reserve status it is not a potent one in reality – not at this juncture. Something dramatic would need to happen that would speed up that timetable – like a serious collapse in the dollar along the lines predicted recently by Yale economist Stephen Roach. (Then the free market might allocate a stronger role for the yuan.) It is interesting that Li Bo would characterize “the internationalization of the renminbi” as “a natural process” and that China’s “goal is to allow the market to choose.”
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