The Yuan Will Not Replace the US Dollar, Nor Will It Be Backed by Commodities

[Gunny]

A little research. Looks like the rumor mill and any subsequent pancking can be called off.

What Would It Take for the Yuan to Dethrone the Dollar?

1. China would have to float the yuan.
2. End capital controls
3. Respect property rights
4. Have a bond market big enough (China has virtually no gov't bond market)
5. Inspire global trust
6. Be willing to have trade deficits
7. Stop export mercantilism
8. Have a currency market big enough

Perhaps China meets condition 8. It flunks the first 7.


The irony regarding point one is the Yuan is pegged to the dollar!
How many requirements does the Eurozone meet?
The Eurozone meets conditions 1, 2, 3, 5, and 8. Condition #1 in this case is float the Euro.
Germany and the trade surplus countries in general will not easily or willingly give up on points 6 and 7.
Arguably, the biggest holdup against the Euro is lack of a unified bond market.


Individual euro-denominated countries have sovereign bonds but they trade at different rates due to different risks.
There is no single eurobond to speak of.
Alternatives
There are no alternatives. To be a legitimate alternative, a county has to meet the above 8 conditions.
This is why talk of the yuan replacing the dollar is complete silliness.
I repeat these conditions every now and again. Those were clipped from my June 29, 2020 post What Would It Take to Dethrone the Dollar?

continued: https://mishtalk.com/economics/the-y...by-commodities

[fj1200]

A little research. Looks like the rumor mill and any subsequent pancking can be called off.

The BRICs have been trying to supplant the dollar for some time now to no avail. Certainly not going to happen in today's environment.

[Gunny]

The BRICs have been trying to supplant the dollar for some time now to no avail. Certainly not going to happen in today's environment.

I had to look. As I see it, China's whole goal is to replace us financially. Not to mention, a couple of MSM outlets are doing their usual "OMG! It's a chicken" routine.

Thought I'd look at someone with a brain for an answer