China Several reserve currencies
It is better for the world to have several reserve currencies, rather than depend on one reserve currency, i.e. the US dollar. 

A single reserve currency is a monopoly. The currency with the reserve currency can abuse its monopoly power. This has happened with America. It has used its monopoly power to impose sanctions and to print money to excessive levels.

For another currency to be a reserve currency, it has to meet the following characteristics:

a) It is issued by a large economy, such as China or European Union.

b) It has an active stock and bond money, so that the other countries can invest their reserve currency to earn a return. 

China has an active stock market. It can now issue government bonds and create a liquid market.

There is a danger that the reserve currency can be a hostage to attacks by international funds.  For example, the funds can sell the reserve currency and cause it to drop sharply.

This volatility in the reserve currency can be tolerated. In the past, the US dollar had increased or reduced sharply by 10% or more over a short period. Somehow, the currency will find its new equilibrium. It may recover to its correct level when the market calms down.

China can issue government bonds for other countries to hold its currency as a reserve currency. It is better for China to borrow in its currency, rather than in US dollar. 

I expect that China will take this bold step to make the CNY as an international currency. 

Tan Kin Lian

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