Print Download PDF Embed

News Release

China’s Currency Unlikely to Topple US Dollar as World’s Reserve Currency

Adrian Monck, Managing Director, Head of Communications: +41 (0)79 615 1671; adrian.monck36f92e6f55bb24b0@1c21af0cc9ea06weforum.org

  • China’s currency, the RMB, is unlikely to internationalize in the short term
  • The world needs to better understand how Beijing views its global responsibilities
  • The theme of the 43rd World Economic Forum Annual Meeting is Resilient Dynamism. For more information, visit http://wef.ch/Davos

Davos-Klosters, Switzerland, 26 January 2013 – China’s currency, the renminbi (RMB), will probably not supplant the US dollar as the world’s reserve currency, except possibly “in the very long term”, said Lawrence H. Summers, Charles W. Eliot University Professor, Harvard University, and a former US Treasury Secretary, in a televised session at the World Economic Forum Annual Meeting today.

While the RMB will continue to internationalize, “the centrality of the dollar is unlikely to change in a major way,” Summers said, adding, “just as there is a basic inertia in languages of communication, there’s a basic inertia in mediums of exchange.”

John Zhao, the Chief Executive Officer, Hony Capital, however, expects freer exchange of the RMB “will come much sooner than most of us expect.” He cited the Chairman of China’s Communist Party Xi Jinping’s recent trip to Shenzhen, during which he visited Qianhai, a special zone set up for experimentation in RMB internationalization, as a sign of China’s intent to globalize its currency.

Summer also spoke of “the reality that China holds some trillions of dollars of liquid financial assets around the world, on which it is earning an extremely low rate of return, while at the same time there are important shortages of investments in key sectors of the world”. Huge amounts of capital flowing from poorer countries to richer countries is “unprecedented territory”, he said, and will require important deliberations.

The panellists discussed how an ascendant China needs to communicate its intentions to the world. China’s world power status arrived decades earlier than expected. “It has been a bigger surprise to China than probably to the rest of the world,” said Kevin Rudd, Member of Parliament, Australia, and a former prime minister of that country. He cited a speech given by Xi, in which he spoke of China’s “rejuvenation”, and the lack of clarity of what that means. China has benefitted from an international rules-based order; the international community “would like to know soon if [China] would like to make changes to the rules,” he said.

Gordon Brown, the UN Special Envoy for Global Education, and Prime Minister of the United Kingdom (2007-2010), said that the rise of China is taking place in an interconnected world, a “totally different context than any other power in any other century”. He urged international communication among China and other countries.

China needs to develop a global agenda, said Zhao, “and learn very quickly how to play a good citizenship role in the new order which is being formed.” He cited two “certainties” in the world: politics is national and economics is global; the challenge countries face is to reconcile the two. 

Communication and a redirection of focus are key. “We spent the last half-century trying to understand Washington,” said Rudd. Now it’s time to study and learn “how Beijing sees the world.”

Notes to Editors

More information about the Annual Meeting 2013 is available at http://wef.ch/davos2013
View the best photographs from the Annual Meeting on Flickr at http://wef.ch/davos13pix
Free media access to the Forum press photo archive Swiss-Image at http://wef.ch/pics
Watch live webcasts of sessions at http://wef.ch/live and on demand at http://wef.ch/davos13video
Watch opinions and analysis of key sessions at http://wef.ch/AM13insights
Watch the sessions on demand on YouTube at http://wef.ch/youtube or http://wef.ch/youku
Become a fan of the Forum on Facebook at http://wef.ch/facebook
Read the summaries of sessions at http://wef.ch/davos13sessions
Follow the Forum on Twitter at http://wef.ch/twitter and http://wef.ch/livetweet (hashtag #WEF)
Read the Forum:Blog at http://wef.ch/blog
Follow the Forum on Google+ at http://wef.ch/gplus
The Forum Media App is available here http://wef.ch/publicapps


The World Economic Forum is an international institution committed to improving the state of the world through public-private cooperation in the spirit of global citizenship. It engages with business, political, academic and other leaders of society to shape global, regional and industry agendas.

Incorporated as a not-for-profit foundation in 1971 and headquartered in Geneva, Switzerland, the Forum is independent, impartial and not tied to any interests. It cooperates closely with all leading international organizations (www.weforum.org).