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Friday, March 2, 2012

Chinese yuan could become second world currency

China and Japan will soon conduct bilateral trade directly in yuan. In 2010, trade between the two countries amounted to 260 billion euros. Could the Chinese yuan emerge as the second world currency after the dollar?

All signs point to the Chinese yuan emerging as a second world currency after the US dollar. A key step in this development was taken in late December when China and Japan agreed to conduct future bilateral trade directly in the Chinese currency.

A deal between these two countries - the world's second and third largest economies - carries weight. Last year, trade between them amounted to 260 billion euros.

"This is an important political step," said Hosuk Lee-Makiyama for the European Center for International Political Economy in Brussels. "It removes currency risks for Japanese companies." Read More