Thursday, December 15, 2011

What will happen when the Yuan is the worlds reserve currency?

Is this a possibility and if so, how long until it happens? Would it be smart to invest in Yuan currency now as it should buy more american dollars after the switch?|||Won't happen. China does not recognize many tenets of international law. No country will allow them to be a reserve currency and subject themselves to huge potential losses. Japan was rumored to be a reserve currency in the 1980's. Didn't happen.|||Will probably not happen anytime soon and probably not later either. Still the days of heavy reliance on the dollar as the reserve currency is probably slowly fading. The USD is becoming increasingly under pressure with the mounting debt of the US economy and the stagnating competitiveness of that nation. As the US becomes less of a force in the world economy, the Chinese Yuan will become more of a force in international trading. In Asia more and more countries are using it as the standard for settlement of trades.


So for sure Yuan will become increasingly used in international settlements, but probably not a world reserve. Still the days of US prominence is becoming a fading memory. As the dollar loose its value less countries will be interested in holding the currency.

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