3 ms·

That is an excellent point! My intuition is that the yuan could be viewed as more reliable than the dollar, when the dollar is propped up precisely on the good

That is an excellent point! My intuition is that the yuan could be viewed as more reliable than the dollar, when the dollar is propped up precisely on the good will that gets destroyed by threatening invasion of allies. China does threaten plenty of invasions, but not in Europe or most of the rest of the world yet.

ericmay 9mo ago
Reliable how? How would you obtain the currency, and what would you do with it? > when the dollar is propped up precisely on the good will The dollar isn't valuable because of good will. Central banks in Europe, or Japan, or elsewhere don't hold dollars because they want to be nice to the United States. They hold them because the United States is incredibly wealthy, has incredibly deep capital markets, high liquidity, and because the dollar is a great medium of exchange.
- epistasis 9mo ago
  Unless China wants it to happen, it won't have the reserve currency. It would require big changes in China's part to make it happen. I fully agree with you that they wouldn't open up things like equities markets in a way that could be trusted by outsiders. But I do think they could open up access to the currency.
  - ericmay 9mo ago
    Right, but what I'm arguing is that the currency isn't going to be that valuable without doing things like opening their markets to outside investors. You could just go with the Euro even if you didn't like the dollar. That's the thing I keep coming back to. What are the specific features of the currency that make it more valuable than the other reserve currencies that exist today? I don't think China is willing to do what they would need to do add those features, because it requires CCP to loosen control and they can't do that. If China "democratized" it would unlock a ton of potential and go on to dominate the globe. But doing that requires untenable changes for the CCP so it won't happen. Plus everyone is going to be mad and distrustful once they invade Taiwan.

ericmay 9mo ago

Reliable how? How would you obtain the currency, and what would you do with it? > when the dollar is propped up precisely on the good will The dollar isn't valuable because of good will. Central banks in Europe, or Japan, or elsewhere don't hold dollars because they want to be nice to the United States. They hold them because the United States is incredibly wealthy, has incredibly deep capital markets, high liquidity, and because the dollar is a great medium of exchange.

epistasis 9mo ago
Unless China wants it to happen, it won't have the reserve currency. It would require big changes in China's part to make it happen. I fully agree with you that they wouldn't open up things like equities markets in a way that could be trusted by outsiders. But I do think they could open up access to the currency.
- ericmay 9mo ago
  Right, but what I'm arguing is that the currency isn't going to be that valuable without doing things like opening their markets to outside investors. You could just go with the Euro even if you didn't like the dollar. That's the thing I keep coming back to. What are the specific features of the currency that make it more valuable than the other reserve currencies that exist today? I don't think China is willing to do what they would need to do add those features, because it requires CCP to loosen control and they can't do that. If China "democratized" it would unlock a ton of potential and go on to dominate the globe. But doing that requires untenable changes for the CCP so it won't happen. Plus everyone is going to be mad and distrustful once they invade Taiwan.