No, China’s Currency Isn’t Taking Over the World
As China moves up the economic pecking order, it has been trying to promote its currency, the renminbi (RMB), as an alternative to the U.S. dollar. The Chinese government has ambitiousplans for establishing offshore centers where companies can raise RMB funds, internationalizing its currency, and possibly enabling the RMB to supplant the dollar as the global reserve currency. The U.S. dollar isn't the only global reserve currency -- countries also keep some of their foreign exchange reserves in euros and yen -- but it has been the dominant one since the 1944 Bretton Woods conference.
During Tuesday night's presidential debate, Republican nominee Mitt Romney repeated his promise to label China a "currency manipulator" on his first day in office. The heatedrhetoric on China in the debate, and throughout the campaign, over which candidate would be tougher on China's currency manipulation and other unfair trade practices reflects Americans' anxieties about the relative standing of the U.S. and Chinese economies, and it suggests that a shift to the RMB would resonate deeply in U.S. domestic politics. However, despite the bluster, the dollar will remain dominant.
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