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It’s very unlikely that the USD will lose its status particularly to the Yuan. You can do that mental calculation yourself. Would you convert all of your lifesa
by tedggh 2mo ago
It’s very unlikely that the USD will lose its status particularly to the Yuan. You can do that mental calculation yourself. Would you convert all of your lifesavings from USD to Yuans today or in the next 10 years? The answer is probably “not a chance”. The reason is simple, liquidity and trust. China has no comparable open and independent financial institutions international central banks can trust, nor can they have them without surrendering control over their monetary policy. So as long as there’s no alternative to the USD (BRICS will likely fail), it will continue being the default global currency for reserves, debt and trade.
- ksbd-pls-finish 2mo ago>Would you convert all of your lifesavings from USD to Yuans today or in the next 10 years? I don't own and dollars and I have no plans to keep dollars now or in 10 years. I own some stock, mostly total world ETFs (traded in EUR, but a significant part of their holdings is obviously American). So does it really matter?
- herbst 2mo agoJust checked. The last 2 years yuan was way more stable than USD compared to CHF and the last 5 years about similar. I don't see why I would prefer USD Especially, realistically speaking i buy WAY more from china than the US
- tedggh 2mo agoEconomic stability alone is not enough for a currency to be an important store of wealth. China doesn’t have a free floating exchange, it has very strict capital controls and lacks political and legal predictability. You need very specific institutional foundations to have a currency like the USD, which the Chinese political system rejects. The US has an independent legal system. If you have a dispute with the US government you can take it to an independent court. In China, you have no way to sue the CPP. China is a single party socialist republic with all the political authority concentrated at the top, so one high impact event like the sudden dead of Xi Jinping could send its economy into fallout because of political uncertainty. In the US the system is explicitly designed to absorb this type of shocks. So for these and many other reasons the Yuan under the current Chinese political system will never be a serious contender to the USD as global currency, it’s just way too much institutional risk for foreign investors. It’s also very unlikely the CPP will ever pick a Yuan rivaling the USD vs political control over their domestic policy. They can’t have both.