- The Chinese yuan is one of the top contenders challenging the USD’s dominance as a reserve currency.
- However, Beijing may not be fully supportive of making the yuan the reserve currency of choice.
- Key challenges include Beijing’s unwillingness to open its capital accounts or to run a deficit.
A debate over de-dollarization has raged on for the past year, fanned by fears that Washington is weaponizing the US dollar-denominated global financial system against Russia over the Ukraine war.
Even high-profile investors have weighed in. In April, billionaire investor Ray Dalio cautioned that the sanctions that squeezed Russia’s dollar currency reserves “increased the perceived risk that those debt assets can be frozen in the way that they’ve been frozen for Russia.”
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