by Eswar Prasad, Lei Ye
September 18, 2013
Popular discussions about the prospects of China’s currency, the renminbi, range from the view that it is on the threshold of becoming the dominant global reserve currency to the concern that rapid capital account opening poses serious risks for China. This issue has broader ramifications, as the rise of China’s economy and its currency has implications for global macroeconomic and financial stability. The Chinese government has recently taken a number of steps to increase the international use of the renminbi. Given China’s rising shares of global GDP and trade, these steps are gaining traction and portend a rising role for the renminbi in global trade and finance.