Subject: Re: OT mostly: forevers
China yuan/RMB is not being used as reserve unless it floats and the Chinese govt is not in any time span while I am alive likely to allow the yuan to float.


Even if “freed”, most countries are not likely to use a fiat that’s under the control of an authoritarian regime which could, at any moment, change the rules of the game. (Notwithstanding the face that Nixon did exactly that in 1971, but the US was so huge there was simply no other option.)

Right now it looks like this:

of currencies as reserve currency:

US Dollar: 59%
Euro: 20%
Yen: 6%
Pound: 5%
All other currencies (this includes the reminbi, as well as the kroner, the swiss franc, the canadian dollar, the australian dollar, the korean won, and others): 10%

Things would have to change - and by a LOT - before the Yuan (or anything else, frankly) becomes the “world currency”. They may rail against the dollar and/or the USA but the reality is the big dog rules right up until the big dog doesn’t. In the past it has taken world-wide macroeconomic events to change; The Pound (sterling) was it until World War II all but bankrupted Great Britain.

Before the pound it was Spain with the world beating economy and a surplus of silver from its Western Hemisphere colonies that was only displaced when those colonies declared independence and Britain’s economy roared forward with the industrial revolution in the 1800’s.

I would give China a pretty good chance of being the industrial superpower of this century - but that “dictatorship by fiat” I would think will hold some back from using it as the defacto world currency (although that may be a difference without a distinction if they get big enough all over the planet.) Anyway, that’s not my biggest worry in the macroeconomic world.