"..Prasad is ultimately discussing the path of the RMB to reserve currency status.
It's not quite there yet, but it's getting there. While the dollar accounts for 64 percent of global reserve currency holdings, and the euro 21 percent, the RMB was up to 1.1% as of 2014. It's in the conversation. Prasad writes early on that the non "market determined" exchange rate of the RMB is a barrier to it becoming more of a reserve currency, but it seems he gets the story backwards. While the RMB's peg to the dollar isn't absolute a la 1994, it's still pretty tight. And that's the problem when we consider the dollar's 21st century volatility. Money is most useful when it's stable. Prasad intuitively knows this from his early analysis of China's currency history. Assuming Chinese monetary authorities move in the direction of RMB-price stability (whether through a gold definition, or more intriguingly private money issuance), odds are the RMB's use as a reserve currency will increase. One can only hope. Treasury's oversight of the dollar has been atrocious over the last 16 years to the logical detriment of the global economy. A better, more stable RMB would perhaps force Treasury to get serious.
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