Dollar vs renminbi

Chinese currency faces fundamental challenges

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People's Bank of China Governor Pan Gongsheng on Wednesday made a strong pitch for a multipolar international monetary system and warned against excessive reliance on a single currency.

The message clearly is to shift away from the dollar-denominated global financial system. China has been consistently trying to project the renminbi (RMB) as an international currency. Six foreign banks announced on Wednesday that they would use China's Cross-Border Interbank Payment System, an alternative to the SWIFT (Society for Worldwide Interbank Financial Telecommunication) payment system.

In principle, there is merit in the argument that the world should not rely on one currency or one payment system to settle cross-border payments. Given the state of American politics and policy, such views may gain traction. For instance, European Central Bank President Christine Lagarde recently remarked that the dominant role of the dollar was no longer certain.