The Chinese yuan could overtake the Japanese yen to become the third most important international currency used in trade by 2012. Or so HSBC economist Qu Hongbin thinks. That's a far sooner than most people expect, considering China just launched a pilot program allowing the settlement of trade in yuan a few days ago. In a research note sent on July 7, he went so far as to say that as much as 50% of China’s trade could be settled in yuan by 2012. How much money are we talking? A cool two trillion dollars [oops, I mean 13.6 trillion yuan!] That will certainly make for an interesting talking point at the G8 summit starting July 8 in Italy.
His note came a couple of days after China started allowing some overseas exporters and importers to settle their trade with China in yuan. Hong Kong, Macao, and a handful of Southeast Asian countries are part of the pilot scheme designed to make the Chinese currency, also known as the reminmbi, more freely used outside China by enabling them to use it for trading purposes. It’s all part of China’s aim to make the yuan eventually freely convertible, and one day, a major global currency along with the dollar, euro and yen.
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