Economists at the International Monetary Fund (IMF) believe China’s yuan possesses the economic foundations necessary to evolve into a more influential global reserve currency in the coming years, although financial restrictions and concerns over transparency within China’s financial system continue to limit its ability to emerge as a serious competitor to the US dollar.
Speaking during an IMF podcast discussion, Barry Eichengreen, Professor of Economics at the University of California, Berkeley, said Beijing has been steadily pursuing policies aimed at strengthening the international use of the yuan through the expansion of cross-border payment systems and currency swap agreements with foreign central banks.
Eichengreen noted that China has already succeeded in building a significant portion of the infrastructure required to support wider global adoption of its currency. However, he stressed that strict capital controls and recurring regulatory interventions remain major obstacles for international investors seeking greater confidence in Chinese financial markets.
According to the IMF experts, these restrictions continue to undermine the yuan’s attractiveness as a fully trusted reserve currency despite China’s growing economic and geopolitical influence.
On his part, Sheema Simpson-Bell, an economist in the IMF’s African Department, said the inclusion of the yuan in the International Monetary Fund’s Special Drawing Rights basket represented formal recognition of China’s expanding role within the global economy, both as a major trading partner and an increasingly important investment destination.
Simpson-Bell explained that IMF research continues to show a clear gap between the size of China’s economy and the relatively limited use of the yuan as an international reserve currency. He added that the Chinese currency’s global share is likely to increase gradually if Beijing continues expanding foreign trade activity and maintains efforts to provide liquidity support to foreign central banks through bilateral currency swap agreements.
He also noted that the impact of these policies has already started to become visible in parts of the international financial system, although progress remains modest compared to the dominance still maintained by the US dollar in global reserves, trade settlement, and international financing markets.
Despite China’s efforts to internationalize the yuan, analysts believe that achieving broader reserve currency status will require deeper structural reforms, including greater financial openness, improved market transparency, and increased confidence in the predictability of Chinese monetary and regulatory policies.
The discussion reflects growing international debate over the future balance of power within the global monetary system as emerging economies seek alternatives to dollar dependency while navigating geopolitical and economic uncertainty
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