Three weeks ago, the International Monetary Fund (IMF) announced that the Chinese renminbi (aka yuan) would join a group of other currencies to comprise what’s called the SDR (Special Drawing Rights) basket. This led some pundits to speculate that this step was a sign that the renminbi would inevitably replace the US dollar as the world’s “reserve currency.” Having reserve currency status is a big deal. Because the terms of the 70-year-old Bretton Woods Agreement basically made the US dollar the world’s reserve currency, the US essentially sets global monetary policy. Foreign banks, businesses, and governments have no real choice … Continue reading What Is Reserve Currency Status?