Guided by Shri M R Sivaraman IAS (Retd.), Former Revenue Secretary, Govt of India & ED, IMF
Image Courtesy: People's Gazette
Issue Brief 5/2024
C3S launched its Issue Brief initiative. An issue brief is a summary of the knowledge surrounding an issue or a problem. It summarizes the issue by giving clear, concise, and complete information describing all facets of a particular issue including a detailed illustration in the form of images, data, and facts. It also includes recommendations for action and predictions on the future course of an issue.
Abstract
U.S. Dollar remains the superior power as the world reserve currency for so many decades. But for the past few years, the global payment value of the Dollar has been reduced drastically. While one currency is facing a crisis, the other currency’s global payment value is increased over the years. The Chinese Government is working on internalize the usage of Yuan by implementing various initiatives like RMB clearing centres, CIPS and so on. Recently, the International Monetary Fund (IMF) has increased the weightage of the Yuan in the SDR Basket and become the third largest country in the basket of currencies. The question that arises here is, does the Yuan have the ability to replace the Dollar as the world reserve currency? This study embarks on a journey to scrutinize the Chinese Government’s initiatives in promoting the Yuan as the world reserve currency, shedding light on their geopolitical contexts, and the parameters required to become the one.
While prior research has delved into the historic progression of Yuan, their GDP contribution, BRICS’ participation, and De-dollarisation, there remains a significant research gap. Specifically, the need for a comprehensive analysis of China’s initiatives remains unfulfilled. The purpose of the study is not only to analyse its effectiveness but also to study whether it meets the parameters of the world reserve currency. Sources for the study include government press releases and documents, research papers, and other multimedia sources including videos and livestreams. The scope of the article is limited to a surface-level analysis and further research has to be done to mitigate the issues faced by the Chinese Government in promoting Yuan.
Keywords: World Reserve Currency, China, Yuan, U.S. Dollar, Growth
Read the full Issue Brief at this link:
