China's growth and the yuan's status are not inextricably linked

smith-gary

China's recent overtaking of Japan as the world's second-largest economy has thrown the issue of the renminbi's internationalisation and, more broadly, reform of the international monetary system back into the spotlight. Yet the supposition by many that there is a causal relationship between economic might and reserve currency status is mistaken. I shall argue here that there are three reasons why.

First things first, any discussion about reserve currency status should really begin with the

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Geoeconomic reserve management

The world order is evolving. Whether, and how, the international economy remains integrated or shifts into spheres of influence has consequences for central bank policy and reserve management.

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