The View | China speeds up transformation of yuan into global currency after crisis
Yuan's transformation into a global currency has been speedy, but major reforms are needed if China is to seriously challenge the US dollar's status
As US long bond yields dip below 2 per cent, we are reminded once again that when the world gets nervous, the United States government's funding costs get cheaper.
This is the privilege of being the world's reserve-currency country and one that other nations have been grumbling about for decades, starting with the French in the 1960s.
A tipping point of frustration came in the wake of the global financial crisis, as investors yanked capital from the comparatively innocent emerging markets and sent it straight to the very country that had started all the trouble.
At the same time, global banks cut off the supply of liquidity to the world's US dollar-dominated trade financing networks, a disaster for exporting nations where abandoned goods began literally piling up at ports.
"For China, a major lesson of 2008," Louis Gave at Gavekal Dragonomics has written, "was the fact that Western banks are not reliable partners."
Thus, China resolved to do something about the matter - to transform the insular yuan into a global currency to rival the US dollar.