| China has made a request of the International Monetary Fund (IMF): It wants the IMF to recommend the Chinese renminbi as a reserve currency. Being a reserve-currency economy would give China easier and cheaper access to capital (something an indebted China is likely to cheer). But there are also drawbacks.
Reserve currencies tend to be in high demand, pushing up the value of their currency relative to where it would otherwise trade. This makes exports less competitive and imports more competitive. China is unlikely to welcome such an outcome. Whether or not the IMF says “yes”—and to what extent—has the potential to shift the global economy toward a duopoly with two dominant reserve currencies—the U.S. dollar and the Chinese renminbi...............................................Full Article: Source
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