LONDON (Reuters) - China’s yuan could become a reserve currency accounting for at least five percent of global foreign-exchange reserves as early as 2025, central bankers said in an annual global survey.
The poll of reserve managers from 43 central banks also revealed a renewed respect for gold as a reserve asset and store of value with more than half saying official attitudes to the precious metal had changed resulting from its price rise and high profile purchases by monetary authorities in India, Russia and China.
Carried out by Central Banking Publications between September and December last year, the survey polled central bankers around the world controlling $2.4 trillion worth of reserve assets and accounting for 30 percent of global reserves.
Nearly all respondents saw the euro’s standing as a leading reserve currency rise after the world financial crisis while 65 percent of them said the dollar’s status had weakened.
Some reserve managers said the economic reputation of the United States had been tarnished for being the “source” of the credit meltdown and that this had triggered a rethink about the need for portfolio diversification.
But several large reserve holders were among those that thought the status of both the euro and dollar had been enhanced, with the greenback displaying its value as a “safe haven” asset.
Central bankers saw little prospect of the Special Drawing Rights (SDRs) issued by the International Monetary Fund (IMF) having an increased role in global reserve management.
The idea, notably floated by the Chinese, was seen as unfeasible by 65 percent of those surveyed, with some pointing out that the allocation of SDRs remained decided by politics.
An overwhelming 87 percent of those surveyed expect China to be successful in internationalizing its yuan though it was stressed that reforms including a flexible exchange-rate regime were necessary.
Over half said it would take more than 16 years for the yuan to make up 5 percent of global foreign-exchange reserves while a third said this was possible by 2025, with China’s trade ties with Asia seen spurring this development.
Reporting by Sebastian Tong; Editing by Chizu Nomiyama