China’s currency, the renminbi (RMB), has taken the world by storm. The RMB is well on its way to becoming a significant international currency, one that is used widely in international trade and finance. The IMF has declared that, in October 2016, the RMB will ascend to the status of a major official reserve currency. These are remarkable developments for a currency whose value is still not freely determined by market forces and whose home country does not allow for the free flow of financial capital across its borders.
Gaining Currency documents the RMB’s impressive rise, with China successfully adopting a unique playbook for promoting its currency. China’s growing economic might, expanding international influence, and the rise of its currency are all intricately connected. The book documents how China’s government has tied these goals together, enabling faster progress toward each of them.
As China’s economy catches up in size with that of the U.S., is the RMB on track to become the dominant global reserve currency? Gaining Currency argues that there are limits to the RMB’s ascendance. Notwithstanding all the hype, the RMB will erode but not seriously challenge the U.S. dollar’s dominance in international finance. Still, the RMB is set for an exciting ride in the years to come.