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There’s a lot of chatter about the dollar losing its status as the world’s reserve currency — and almost all of it is nothing more than noise.
Here’s the reality…
You can’t replace something unless you have a credible alternative. And right now, there is no real competition for the U.S. dollar on the global stage. The most commonly floated alternative is China’s yuan (or renminbi, depending on the translation).
But that idea falls apart the moment you look under the hood.
Currency Manipulation Kills Credibility
China doesn’t even try to hide the fact that it manipulates its currency. The People’s Bank of China steps in whenever it wants, setting fixed exchange rates or guiding the market to suit political or economic goals.
That might work for China domestically — but no one serious about global finance is going to trust a reserve currency that can be yanked around on a whim.
Reserve currencies require transparency, consistency and — above all — trust. If the rules change based on whatever benefits the ruling party at the moment, how do you price risk? How do you run a global portfolio or issue debt in that currency with any confidence?
That’s the core reason the yuan doesn’t have a shot. It’s not about economic size or trade volumes — it’s about stability and rule of law, and China isn’t even playing the same game.
What’s Actually Happening
Yes, we’re seeing some countries diversify away from the dollar in trade deals, and central banks are buying more gold. But that doesn’t mean the dollar is going anywhere.
The world still runs on dollars — commodities are priced in dollars, global debt is issued in dollars, and cross-border transactions are still overwhelmingly settled in dollars.
Is the dollar perfect? No.
But it’s still the cleanest shirt in a dirty laundry pile. Until there’s a currency with deep, liquid markets and a predictable legal system behind it, the dollar isn’t being replaced. And if we’re looking at the yuan as the next in line, it’s not even close.
China’s playbook of top-down control might work inside its own borders, but when it comes to reserve currency status, the rest of the world won’t play by those rules. Markets may move fast — but trust takes time.
And right now, the yuan hasn’t earned it.
Kane Shieh
Kane Shieh Trading
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