Then, we will have the beginning of a new era of international relations that will be the near end of the Dollar as the world
reserve currency".
A
reserve currency lasts no longer than foreign confidence in its holder's ability to pay its bills.
Another argument for having a global
reserve currency is that foreign borrowing becomes cheaper.
"Since there is pressure on the dollar reserve, I think the move towards the Chinese yuan would be a positive step for both Pakistan and China," he added.He also said that Pakistan adopted yuan as a
reserve currency under its financial management strategy.
Third, I trace the RMB's evolution as a
reserve currency.
Only if and when paper dollars are demonetized will greenbacks cease being the
reserve currency. The risk of demonetization of the dollar is very low.
Instead, the renminbi has gained no ground as a
reserve currency and probably won't as long as China's financial markets remain largely closed, underdeveloped and subject to government meddling.
China's central bank has said that the yuan will gradually emerge as a
reserve currency, according to Reuters.
The Chinese yuan officially joined the USD, the Euro, the Japanese Yen and the British Pound Sterling as a global
reserve currency.
Drawing on lessons learnt from the euro crisis, and consistent with Fitch's longstanding approach, those gaining most from euro adoption would be countries with weak external finances, as they would benefit from the
reserve currency status of the euro, high level of loans in euros to the private and government sectors (or high "euroisation") which would benefit from the neutralisation of exchange rate risk on the economy, and a fixed exchange rate.