Economic Watch: European experts eye stronger growth of RMB as global currency reserve

Source: Xinhua

The Chinese currency Renminbi (RMB) has been increasingly used as international currency in recent years, and it will play a more and more important role as a global currency reserve in the future, European experts have said.

According to the latest data from the International Monetary Fund, in the fourth quarter of 2021, the RMB accounted for 2.79 percent of the composition of world reserve currencies.

Speaking to Xinhua, Omar Rachedi, professor at the Department of Economics, Finance and Accountancy at the ESADE business school in Madrid pointed out that the RMB has been "increasing its share as international currency, and over the last two years, it has almost doubled."

Rachedi said one of the reasons for the growth is "the rapid increase in the share of Chinese GDP (gross domestic product) in world GDP and the stronger trade ties of China with international partners."

Other initiatives such as the Belt and Road Initiative and the issue of a digital yuan have also contributed to increasing the value of the RMB on the international market, Rachedi added.

Ferran Brunet Cid, professor of Applied Economics at the Universidad Autonoma de Barcelona, pointed out China's enormous economic growth was also a factor as it has allowed the country to "become an exporting economy and factory in the world."

Cid added that the significance of the RMB as a reserve currency will also grow to a point where it represents around "10 percent of reserves."

Rachedi agrees with the figure of 10 percent, noting the high inflation in the United States and the "slow growth of Western countries compared with China." He added that the RMB is increasingly being accepted on the global commodities market.

Lord Mayor of the City of London Vincent Keaveny said the RMB currency has also grown in importance since China opened up to the world in 1978.

"There will be some fluctuations ahead, but in the long run, few will deny that the RMB is set to become a more important player on the world stage," said Keaveny.