- Historically the ‘currency empires’ have been the Dutch guilder, sterling and the US dollar.
- These currencies belonged to the largest trading countries and in the present times that country is China
- China’s large debt is mostly in Yuan and not something to worry about.
- Single party government is an advantage over other countries because of stable policies and it functioning like a ‘corporation’.
Trade deficit = Yuan going overseas and building up reserves in foreign central banks. This is one of the reasons how the US dollar is able to gain so much influence, because the US in essence exports dollars.
However the other issue is that nobody actually trusts the Yuan to begin with and so majority of trade China conducts is in dollars anyways. It’ll be interesting to see if the dollar’s influence does degrade overtime like people keep saying but for now, the dollar is king.