Rogoff Predicts Yuan Could Become Global Reserve Currency within Five Years

Renowned economist Kenneth Rogoff has made a bold prediction that the Chinese yuan could become a global reserve currency within five years.

The Harvard University professor attributes this shift to China's efforts to internationalize its currency, with President Xi Jinping's emphasis on yuan internationalization marking a significant turning point. As investors increasingly reduce their reliance on the US dollar, Rogoff believes that China's government bond market should be opened to foreign investors and financial infrastructure, such as futures markets and interest-rate swaps, should be built.

Rogoff also stresses the importance of developing an independent payment system for China, free from dependence on SWIFT. He suggests that blockchain technology could replace existing financial infrastructure at a lower cost, with China's Cross-Border Interbank Payment System (CIPS) serving as a foundation.

The economist highlights the role of digital assets in weakening the dollar-based system, citing their spread in illicit transactions. However, he notes that governments can regulate virtual assets to control them effectively. Rogoff also criticizes the US stablecoin regulatory framework as overly lax and predicts that regulation could be tightened to match central bank digital currencies (CBDCs).