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VoxEU: The Renminbi as a Global Currency

Author: Jeffrey A. Frankel, James Harpel Chair for Capital Formation & Growth, Harvard University
October 10, 2011


As China’s currency for international trade has steadily grown, some argue the renminbi could displace the dollar as the international reserve currency. Jeffrey Frankel examines these propositions by looking at how other international currencies established themselves.

All of a sudden, the renminbi is being touted as the next big international currency.

Just in the last year or two, the Chinese currency has begun to internationalize along a number of dimensions.

A renminbi bond market has grown rapidly in Hong Kong, and one in renminbi bank deposits. Some of China’s international trade is now invoiced in the currency. Foreign central banks have been able to hold renminbi since August 2010, with Malaysia going first.

Some are now claiming that the renminbi could overtake the dollar in the number one slot in the international currency rankings within a decade

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