About the Future of the Formation of the Chinese Yuan as a World Currency

Abstract

The article presents an analysis of the possibilities and prospects of the Chinese yuan on the way to becoming a world currency. Research arguments in favor of the broad and growing internationalization of the yuan are presented, including regional initiatives seen as a promising stage of internationalization, as well as encouraging forward-looking analysis. It describes the constant obstacles preventing the yuan from becoming a full-fledged payment mechanism in the field of cross-border transactions. It is shown that the Chinese currency is now becoming an important settlement currency in bilateral cross-border transactions, in addition to cross-border settlements and payments, the yuan also demonstrates its strength in cross-border investments and financing, and the growth of the yuan's share in global payments has allowed China to be in fifth position among all countries in the world in terms of currency activity for global payments. The elements that show that at this stage the yuan should rather be considered in its regional dimension, especially on the basis of the existence of a de facto regional currency bloc, are listed. Possible directions for the reorganization of the global financial system are formulated, taking into account the role of the Chinese yuan and the possibilities of the digital yuan in this. The possibility of the yuan's growth in a reserve function and a means of payment is highlighted, taking into account the fact that the value reserve function is an important criterion for the degree of internationalization of the currency. It is concluded that there are obstacles to the Chinese yuan's ability to become a full-fledged payment mechanism in the field of cross-border transactions, in particular, capital account liberalization and institutional development, if these obstacles were eliminated, the potential of the Chinese currency could be realized.