EU Central Banks are Changing Dollars Reserves in Yuan. What Does it Mean?
Alessandra Bruni 12/06/2019
Although the yuan took that major step towards broader international adoption three years ago, today, just a small percentage of foreign exchange reserves are held in RMB, even if it seems about to increase, according to the latest data from the IMF.
The Chinese Belt and Road Initiative has considerable merit in the internationalization of the yuan, increasing the influence of the RMB along the Silk Road. However, the significance of the shift from dollar to yuan will manifest itself when it will extend to the entire globe.
China still faces some difficulties in having a truly international currency. Capital controls and a lack of regulatory transparency make financial institutions reluctant to invest in Chinese assets. However, China is showing signs that it is actually relaxing some of its rules used to control the currency. As the yuan gains more international prestige and value, Beijing might be encouraged to open up further.