THE ECONOMIST Jun 21st 2014 | HONG KONG | (Click here to original new)
Buzz about the rise of China’s currency has run far ahead of sedate reality
IF HEADLINES translated into trading volumes, the yuan would
be well on its way to dominating the world’s currency markets. It once
again graced front pages this week after moves to lift its status in
London, the world’s biggest foreign-exchange market. This was the latest
instalment of a five-year-long public-relations campaign. Since 2009,
when China first declared its intention to promote the yuan
internationally, a string of announcements and milestones has cast the
Chinese currency as a putative rival to the dollar.
The hype rests on several seemingly impressive numbers. Yuan
deposits beyond China’s borders have increased tenfold in the past five
years. The “dim sum” bond market for yuan-denominated debt issued
outside China has gone from non-existence to a dozen issuances a month.
And the yuan is the second-most-used currency in the world for trade
finance.
