Jakarta, CNBC Indonesia – China seems to be increasingly striving to increase the flexibility of the yuan currency. Even China has continued to reduce restrictions on the use of the cross-border Yuan.
This was disclosed by the Governor of the country’s Central Bank, Yi Gang, as quoted from CNBC International. He said this step would also further promote the country’s financial services industry.
“Increase the flexibility of the yuan, and let the exchange rate play a better role as an automatic stabilizer in the macroeconomic and international balance of payments,” he said at the Bund Summit conference in Shanghai, Saturday (24/10/2020), quoted on Sunday (25/10 / 2020).
According to the news agency Xinhua, China plans to expand several investment schemes outward to meet the needs of domestic investors to allocate assets globally. This follows a steady strengthening in the yuan against the dollar.
Previously, the US dollar was seen as the dominant currency because it was used much more than the currencies of other countries. But lately, China’s currency, the yuan, has also begun to show its strength.
The yuan has increased in scope in global reserves as well as in international trade. This is considered as one of the initial steps to replace the domination of the dollar as the world’s reserve currency.
Even so, a number of analysts assess the advantage of the yuan in the global arena is still far behind the dollar. This also includes the European currency, the euro.
According to senior investment strategist at Vontobel Asset Management, Sven Schubert, there are a number of factors that could increase the dominance of the yuan on the global scene. Among them are technology and investment support.
“Factors such as the escalating technology war between the US and China, as well as Beijing’s growing influence through the Belt and Road initiative, are also important in the yuan’s dominance,” Schubert said.
“Thanks to China’s Belt and Road Initiative (BRI), its influence in the Eurasia and African regions is increasing as it ties many countries to their economic system, which paves the way for the yuan to find its way more into global trade contracts,” he said.
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