1/5
While the Russian sanctions will certainly increase the desire of some countries to have an alternative to the dollar, it wasn't insufficient desire that prevented the emergence of the RMB or some other currency in the past as a safe haven alternative.
ft.com/content/d5346d…
While the Russian sanctions will certainly increase the desire of some countries to have an alternative to the dollar, it wasn't insufficient desire that prevented the emergence of the RMB or some other currency in the past as a safe haven alternative.
ft.com/content/d5346d…
2/5
It was the basic conditions of global currency status. For the RMB to become an alternative to the dollar it isn't enough that once, during a period of turmoil, it retained its value. This is just the minimum necessity for a safe haven currency, and very far from sufficient.
It was the basic conditions of global currency status. For the RMB to become an alternative to the dollar it isn't enough that once, during a period of turmoil, it retained its value. This is just the minimum necessity for a safe haven currency, and very far from sufficient.
3/5
For the RMB to be a major alternative to the dollar, not only must it remain stable during every crisis, but, more importantly, China must completely open its capital account, remove any interference on inflows and outflows, and liberalize its financial system.
For the RMB to be a major alternative to the dollar, not only must it remain stable during every crisis, but, more importantly, China must completely open its capital account, remove any interference on inflows and outflows, and liberalize its financial system.
4/5
Among other things of course this means losing control of its current account and accepting large, persistent deficits. It also requires, above all, rule of law granting supremacy to property rights and treating foreign owners the same way as it treats Chinese owners.
Among other things of course this means losing control of its current account and accepting large, persistent deficits. It also requires, above all, rule of law granting supremacy to property rights and treating foreign owners the same way as it treats Chinese owners.
5/5
Not only is this not the case now, but China hasn't even been moving in that direction. The dollar will eventually lose its centrality, and US sanctions may certainly speed up that process, but without radical political transformation the RMB cannot become the alternative.
Not only is this not the case now, but China hasn't even been moving in that direction. The dollar will eventually lose its centrality, and US sanctions may certainly speed up that process, but without radical political transformation the RMB cannot become the alternative.
It's interesting to read this 1986 article in the context of current discussions.
nytimes.com/1986/08/31/bus…
nytimes.com/1986/08/31/bus…
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