Sun, Nov 30 2008, 02:32 GMT
Ex-China Regulator: Sees Yuan As Reserve Currency In 30 Yrs
BEIJING -(Dow Jones)- The Chinese yuan will likely take 30 years to become an international reserve currency, Tang Shuangning, a former senior bank regulator and central bank official, said Sunday in prepared remarks.
The yuan will become a currency for trade between China and neighboring countries in the first 10 years, a regional currency for investments in the next 10 years, and finally become an international reserve currency in the following 10 years, said Tang, who is now chairman of state-controlled financial conglomerate China Everbright Group.
Over the next three decades the U.S. dollar's dominant role in the world won't change, he said. He added, however, that the dollar's position will face challenges from a U.S. recession and the growth of emerging economies.
China now continues to have foreign-exchange controls in the capital account, making it hard for the yuan to be used, for example, in cross-border financial investments.
Tang said China should continue to allow the local unit to steadily rise and gradually become fully convertible over the next 30 years to increase its role as a currency used in payments and for reserve. Beijing has said repeatedly it aims to gradually make the yuan fully convertible, but hasn't given a timeline for it.
China's financial markets should also continue to grow, a trend that would help the yuan become a reserve currency, Tang added.