Is Dollar Displacement Overhyped?

What are Beijing’s intentions for its currency, the renminbi (RMB)? Could it really displace the U.S. dollar as the world’s reserve currency? Edoardo Campanella and Meg Rithmire argue, not quite. Their research shows that China has moderated its goals for its currency, aiming to internationalize the RMB without displacing the dollar. They suggest that the U.S. would benefit from a “monetary coexistence” scenario, where the dollar remains the world’s reserve currency, but the RMB also serves an important role in the international monetary system. Instead of trying to suppress the RMB’s global use, the U.S. should facilitate its internationalization while protecting its own financial interests, confident that the dollar will remain central to global exchange.

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