Nezavisimaya Gazeta published the op-ed by Evgeniy Goryunov, Head of the Monetary Policy Department at the Gaidar Institute, containing analysis of the prospects for de-dollarization of the global economy and the role of the yuan in this process. The expert noted: "There are prerequisites for de-dollarization, but the dollar’s dominance will not end overnight from Wednesday to Thursday. This process will probably take more than one decade."
Evgeniy Goryunov identified three main trends in the redistribution of power between world currencies: maintaining the dollar’s unshakable position, weakening of the euro, yen, Swiss franc and British pound, as well as the yuan growing influence on the world currency market and in international settlements. However, despite rapid growth of the yuan’s circulation, the expert believes that it is not yet ready to challenge the dollar.
“In order for the yuan to become a full-fledged alternative to the dollar, something is needed that the Chinese economy does not currently have and is not expected to have, i.e. a developed, flexible, multi-layered and financial system open to the world, possessing established and transparent regulatory rules. It is not a supply of goods that makes a reserve currency (whatever that means), but first of all it is financial infrastructure associated with this currency," explained Evgeniy Goryunov. He also noted that "the Central Bank in China is directly subordinate to the government, which means that the PRC lacks formalized institutional brakes that guarantee monetary discipline."
Moreover, the author believes that turning the yuan into a global currency will create risks for the Chinese economy, making it less manageable. “To make the yuan a leading reserve currency, the Chinese authorities must allow a significant growth in financial flows, and this is risky. "It is unlikely that the Chinese government will take such steps," concluded Evgeniy Goryunov. He stated that «there are no serious grounds for concluding that the dollar will soon collapse. Moreover, we should not expect it to be replaced by the yuan."
