Yuan an international medium of exchange Research Paper

Yuan an international medium of exchange - Research Paper Example Presently, the United States Dollar is the global medium of exchange. Since the beginning of this trend, the United States has benefited greatly in terms of the economic stability that the country has experienced. Clearly, if traders all across the world are seeking to have access to the United States Dollar, the only implication is that the value of the Dollar would continue to be strengthened naturally. However, various national and international factors have given rise to a situation whereby the strength of the United States Dollar continues to decline as against other global currencies. Today, the United States Dollar has been tagged as a weaker currency and thus its preference for international trading seem to be dwindling sharply. Without any doubt, the impact of this current trend is a positive one for the ambition of the Chinese government to have the Yuan become a global currency. From an international realism theory perspective, the initiative taken by China would have to m eet a number of conditions, among which includes the fact that â€Å"there must be strong demand by world traders, investors, and central bankers for the currency as a medium of exchange for foreign trade settlement†. But once the Yuan becomes accepted as an international medium of exchange and thus becomes a global currency, it would become â€Å"a unit of account for denominating international financial transactions, and a store of value for central banks' foreign exchange reserves†.And this is by no means an enviable position wanting.