James W. Harpel Professor of Capital Formation and Growth
Just in the last year or two, the Chinese currency has begun to internationalize along a number of dimensions. A RMB bond market has grown rapidly in Hong Kong, and one in RMB bank deposits. The currency is starting to be used to invoice some of China's international trade. Foreign central banks have been able to hold RMB since August 2010, with Malaysia going first.
Some are now claiming that the renminbi could overtake the dollar for the number one slot in the international currency rankings within a decade (Note 1). The basis of this prediction is, first, the likelihood that the Chinese economy will surpass the US economy in size and, second, the historical precedent when the dollar overtook the pound sterling as the number one international currency during the period after World War I.
Frankel, Jeffrey A. "Internationalization of the Renminbi: What Does History Tell us About the Precedents?" Research Institute of Economy, Trade and Industry (RIETI), October 5, 2011.