Yuan Faces Long Odds as Major Reserve Currency

Despite its growing importance in global trade, Standard Chartered's China CEO Jean Lu says the yuan has little chance of displacing the U.S. dollar as a major reserve currency in the near future.

Lu argues that the yuan faces significant challenges in gaining traction overseas due to limited liquidity in offshore markets and strict capital controls imposed by Beijing.

However, Lu notes that other second-tier currencies like the yen and the pound may face competition from the yuan as Beijing continues its efforts to promote internationalization of the Chinese currency.

The People's Bank of China is leading the push for renminbi internationalization, with initiatives such as launching new repo facilities and tapping major institutions like Deutsche Bank as offshore clearing banks.