'Chinese yuan to be world's third currency by 2020'

The yuan will be the world's third largest currency after the U.S. dollar and euro, a Chinese report predicts.

'Chinese yuan to be world's third currency by 2020'

World Bulletin / News Desk

The Chinese yuan will become the world's third largest currency, after the dollar and the euro, within six years, it is predicted.

The claim came in report from the International Monetary Institute of Renmin University in China and China's Bank of Communications released on Sunday.

It said that the currency's internationalization index – which measures trade and investment in the yuan – rose to 1.69 at the end of 2013 from 0.92 the previous year.

China aims to internationalize the currency to preserve its value into dollars for global trade and to convert Chinese debt in its own currency.

In 2013, China's foreign trade in the yuan, also known as the renminbi, reached 4.63 trillion yuan ($759 billion), up 57.5 percent year-on-year. Investment totaled 534 billion yuan, up 90 percent year-on-year.

The dollar has been considered the world's reserve currency since the end of World War II., due to the U.S.'s economic and military strength. This is an advantage to the U.S. which can therefore borrow at a lower interest rate than other countries.

Meanwhile, the BRICS nations – Brazil, Russia, India, China and South Africa – have launched the New Development Bank, based in Shanghai, which will offer finance to developing countries. They have also put in place a series of currency agreements which will help resolve financial imbalances with the rest of the world.

Güncelleme Tarihi: 21 Temmuz 2014, 17:48