The US dollar vs China yuan as world's reserve currency

The US dollar is the world's reserve currency, meaning that it is the most widely used currency in international trade and finance. There are a number of reasons why the dollar is the world's reserve currency, including:

• Stability: The US dollar is seen as a stable currency, which is important for international trade and finance.
• Liquidity: There is a large supply of US dollars available in the global market, which makes it easy to buy and sell.
• Transparency: The US government publishes regular reports on the US economy, which helps to make the dollar more transparent.

China has been trying to promote the use of the yuan as a reserve currency, but there are a number of reasons why even China doesn't want the yuan to replace the dollar as the world's reserve currency. These reasons include:

• Capital controls: China has strict capital controls, which make it difficult for foreign investors to buy and sell yuan.
• Financial system: China's financial system is not as developed as the US financial system, which makes it less attractive for foreign investors.
• Transparency: China's government is not as transparent as the US government, which makes it more difficult for foreign investors to assess the risks of investing in China.

In conclusion, there are a number of reasons why even China doesn't want the yuan to replace the dollar as the world's reserve currency. The dollar is seen as a stable, liquid, and transparent currency, while the yuan is not. China is still working to make the yuan more attractive to foreign investors, but it is likely to be a long process.

Here are some additional details from the article:

• The US dollar is the most widely used currency in international trade and finance. In 2021, the dollar accounted for 63% of global foreign exchange reserves.
• The US dollar is seen as a stable currency. This is because the US government has a strong track record of managing its economy and its debt.
• The US dollar is liquid. This means that there is a large supply of dollars available in the global market, which makes it easy to buy and sell.
• The US dollar is transparent. The US government publishes regular reports on the US economy, which helps to make the dollar more transparent.
• China has strict capital controls. This means that it is difficult for foreign investors to buy and sell yuan.
• China's financial system is not as developed as the US financial system. This makes it less attractive for foreign investors to invest in China.
• China's government is not as transparent as the US government. This makes it more difficult for foreign investors to assess the risks of investing in China.

3 reasons why even China doesn't want the yuan to replace the dollar as the world's reserve currency (msn.com)