China’s renminbi might one day challenge the role of the U.S. dollar as the world’s leading reserve currency, European Central Bank Executive Board member Yves Mersch said.
“Having become an important trading and payment currency, the renminbi is now taking the first steps toward establishing itself as an international investment currency,” Mersch said in a speech at Luxembourg’s Renminbi Forum yesterday. “Due to the size of China’s economy and its importance in global trade and, potentially, finance, the renminbi might ultimately come to challenge the U.S. dollar” as a leading reserve currency.
China’s Communist government has been gradually allowing the currency of the world’s second-largest economy to float more freely in recent years, while keeping strict limits on the amount of money that can flow out of the country. The renminbi became one of the top 10 currencies used for payments last year as its use in settling trade has increased.
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