The campaign to internationalise the RMB from 2009 has been a failure. China’s RMB is part of a managed exchange rate regime and a system of capital controls and financial repression that is inconsistent with the RMB achieving international status.The euro is part of a dysfunctional monetary union and its share in the international monetary system has declined over the last 15 years. The US dollar’s potential rivals are beset with problems.The US dollar has seen significant cyclical swings in value against other currencies, consistent with the role of a floating exchange rate in moderating economic shocks.So long as the US enjoys a floating exchange rate and an independent Federal Reserve continues to target domestic inflation, the United States does not have a meaningful or effective exchange rate policy. The role of the US dollar does not depend on a 'strong dollar' policy.China’s holdings of US dollar reserves have no value as an instrument of international economic coercion. If foreign central banks were to hold less US dollar assets, it would make almost no difference to the US dollar exchange rate or interest rates.

Contrary to popular myth, the US dollar’s role owes very little to its status as a so-called 'reserve currency.' The US dollar share of the world’s foreign currency reserves is a symptom, not a cause, of its dominant role.The role of the US dollar reflects the unrivalled size, depth and liquidity of US dollar capital markets, backed by America’s high quality political and economic institutions.The US dollar remains the dominant currency for international trade and investment, foreign exchange market turnover and settlements, debt issuance and official foreign exchange reserves held by central banks.

Current us coinage