Economist Kenneth Rogoff, a professor at Harvard, projects that the yuan could establish itself as a global reserve currency within five years. According to him, the recent declaration by President Xi Jinping, which explicitly expresses the intention to internationalize the Chinese currency, represents a significant shift in the strategy adopted by the country.
International investors have shown growing interest in diversifying their assets beyond the US dollar. For the yuan to gain greater global share, Rogoff highlights the need for China to open its government bond market to foreign investors. In addition, the country still needs to advance in the development of futures markets and interest rate swap contracts.
Although full access to capital markets is relevant, Rogoff points out that it is not indispensable, citing the experience of the dollar in the 1970s, when its internationalization occurred without this condition. In this sense, blockchain technology emerges as a fundamental tool for creating financial systems independent of SWIFT, whose foundation already exists in China’s Cross-border Interbank Payment System.
In addition to the role of the yuan, Rogoff assessed that the global underground economy represents about 20% of global GDP, equivalent to at least 20 trillion dollars. He identified that stablecoins have taken an important share in illegal transactions that traditionally used physical cash, which brings new challenges to the international financial system.
On the other hand, the economist stated that cryptocurrencies will not replace the dollar in the legal economy due to regulatory restrictions imposed by governments. Rogoff also criticized the United States’ Genius Act for its liberal stance on stablecoin regulation, arguing that future rules on these digital currencies should approach the strict criteria applied to digital currencies issued by central banks.
Similarly, both Europe and China have progressed in building independent financial platforms aimed at reducing dependence on US sanctions. This strategy confirms the search for alternative systems that ensure greater economic autonomy in the current geopolitical landscape.
The expectation is that the consolidation of the yuan as a reserve currency will occur amid the expansion of these markets and the increasing adoption of technologies that promote global financial independence. However, the completion of this process depends on the evolution of regulatory policies and the ongoing development of financial markets in China.
