Summary of A Middle Ground

The Renminbi Is Rising, but Will Not Rule

Finance & Development Magazine,

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A Middle Ground summary
The renminbi is not ready to take its place as a reserve currency, despite China’s economic stature.


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In October 2016, the International Monetary Fund formally designated China’s renminbi as one of the world’s reserve currencies, reflecting China’s standing in the global economy. But Professor Eswar Prasad argues in this well-reasoned analysis that, while the renminbi is gaining significant clout, it is far from becoming a preferred currency in global foreign reserves. Prasad examines a range of issues, including Chinese governance, to explain this dichotomy between economic power and currency status. getAbstract recommends this authoritative report to executives and policy officials interested in the future of the renminbi.

In this summary, you will learn

  • Why a gap exists between Chinese economic strength and the renminbi’s global influence and
  • How Chinese officials can position the renminbi as a prominent international currency.


China contributed 15% – roughly $11 trillion – to global gross domestic product in 2016, making its economy the second biggest in the world next to that of the United States. In 2016, China’s renminbi joined the US dollar, yen, euro and pound sterling as an “elite global reserve currency” of the International...
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About the Author

Eswar Prasad is a professor at Cornell University and senior fellow at the Brookings Institution.

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