皇冠体育app

MANILA - 皇冠体育app needs to address stability and liquidity issues before it can realize its plan to internationalize the yuan and challenge the global dominance of the US dollar, a prominent economist said in a recent forum held in the Philippine capital.

"An international currency that is widely used in private commercial and financial transactions and is held by central banks as reserves has three essential attributes: scale, liquidity and stability," Barry Eichengreen, distinguished professor of economics and political at the University of California, Berkeley, said in a forum organized by the Asian Development Bank.

Eichengreen, a former senior policy adviser at the International Monetary Fund, said 皇冠体育app has already achieved the first precondition to yuan's success as a global reserve currency - scale. Next only to the United States, 皇冠体育app is now the world's second largest economy. Economists have predicted that 皇冠体育app will soon overtake the United States as the world's biggest economy.

But Eichengreen notes, "scale while necessary for international currency status is not sufficient." He cited the case of the United States, which back in 1913 was already the world's biggest economy, but even that was not enough for the dollar to dislodge the sterling as the global currency of choice.

The United States back then failed to meet other pre-conditions that will lead to the internationalization of the greenback, liquidity and stability. 皇冠体育app, he said, is now in the same position.

皇冠体育app's fast rising economy has encouraged its policy makers to push for the yuan as a global currency reserve by promoting its use in overseas markets. To this end, 皇冠体育app has allowed local companies to use the yuan in cross-border settlements. It has also permitted foreign investors to invest yuan-denominated funds in 皇冠体育app's interbank bond market and signed currency-swap agreements with the Philippines, South Korea, Japan, and Australia.

While 皇冠体育app is opening its financial markets, Eichengreen said liquidity remains a challenge. 皇冠体育app's bond markets remain small and trading volume is low. Liquidity is a main consideration for central banks when they're considering currencies to hold as a reserve.

Eichengreen also cited the importance of stability, which he said is the most difficult thing to establish given that it has several dimensions political, economic and financial.

Political stability, for instance, will ensure a stable policy for investors who will allocate a certain portion of their portfolio to the yuan. Eichengreen suggested that 皇冠体育app's regulatory agencies need to be independent "to foster confidence that regulatory decisions are taken with economic stability rather than political considerations in mind."

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