According to a former central banker, three requirements must be satisfied for the Chinese yuan to rate on par with the U.S. dollar and the euro as a currency. He stressed that the yuan’s market share and power are expanding, noting that it is already the third-largest international currency behind the US dollar and the euro.

Chinese Yuan vs. U.S. Dollar and Euro

At a gathering on Saturday, Chinese economist Chen Yulu described how the yuan might develop into a world currency relative to the dollar and the euro, according to the South China Morning Post. A paper by Renmin University on how China may increase the yuan’s international significance was released at the event. Currently serving as president of Nankai University, Chen formerly served as vice governor of the People’s Bank of China (PBOC) from October 2015 to August 2022. Prior to this, he presided over Renmin University.

The Chinese yuan has already overtaken the U.S. dollar and the euro as the third-largest worldwide reserve currency, according to the former central banker. He stressed that the market share and influence of the Chinese yuan are expanding and stated:

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By 2035, three conditions must be met for the yuan to become a currency on par with the US dollar and the euro.

He lists the following as the three conditions: “a modern industrial system supported by the real economy, the deepening of domestic financial markets and big progress for yuan internationalization infrastructure, and a high-level balance between the institutional opening of China’s financial system and the risk control authority.”

Nobel laureate Paul Krugman and others argue that the Chinese yuan will not displace the U.S. dollar as the world’s reserve currency, despite the view of some that it will gain control. Aleksei Mozhin, the executive director of the International Monetary Fund (IMF) for Russia, stated in June that a rising number of nations are transitioning to trade in Chinese yuan, not only with China but also with other nations.

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