The Outlook for Chinese RMB Overtaking the U.S. Dollar as the Major Reserve Currency

Student’s Name
Professor’s Name
Course
Date
The Outlook for Chinese RMB Overtaking the U.S. Dollar as the Major Reserve Currency
Final answer:
Remarkably, the U. S. Dollar will remain ahead as the major currency reserve, and the Chinese RMB won’t overtake the Dollar anytime soon.  
           Internationalizing RMB calls for substantial capital account liberalization. According to reports, there are four reasons why the RMB will not be considered the main reserve currency after the Dollar. Firstly, the Chinese government has strict control over its currency. Secondly, there are limitations to using the currency internationally. Thirdly, Chinese middle-class individuals request more government certainty. Finally, the dominant nation in national defense significantly impacts reserve currency.
           Chinese Yuan needs considerably more time to be regarded as significant for the global foreign exchange reserve status. The main reason is that shifting one currency to the other as a major currency is a procedural process that consumes considerable time. Therefore, the overall process is relatively slow. As a result, although China is currently ahead of America concerning its economic size and can be considered the planet’s largest economy, it is still behind regarding per capita terms.
           International markets should accept and use a specific currency to be regarded as a major reserve currency in the long term. The U.S. dollar and Euro currencies are doing well in international markets, although RMB can potentially be considered due to China’s huge trade volume only that ...