DEBATE: The Dollar at Bay?
President Xi Jinping wants China to take center stage in world affairs, and with China's economy expected to overtake America’s, perhaps during Xi’s presidency, he could get his wish. Will China’s dynamism – and Donald Trump’s carelessness – lead to the renminbi replacing the dollar as the world’s main reserve currency?
- Barry Eichengreen highlights a link between geopolitics and foreign reserves that could cause countries, particularly in Asia, to divest their dollar holdings.
- But Paola Subacchi argues that, because China wants multiple reserve currencies as a way to provide liquidity and choice, the renminbi would augment the dollar, not replace it.