Currency war – A window for the rise of the Renminbi
A balance-sheet recession since 2009 has forced developed market central banks into a sub-optimal policy path of a currency war, which is indeed a zero sum game that has spread to the emerging markets. Behind the currency war, there are seismic structural shifts unfolding for the G3 currencies (USD, EUR, JPY) and emerging markets, giving rise to some secular trends that are conducive to the rise of the renminbi to challenge the global dominance of the G3 currencies. The rise of the renminbi is both an indicator and a result of the evolution in the global macro landscape that shifts economic weight from the developed markets led by Europe, Japan and the US to emerging markets led by China. This lecture will explore the outlook for redefining the global major currency club from G3 to G4 by including the renminbi.