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China and the International Monetary System

Does Beijing Really Want to Challenge the Dollar?

Chinese banknotes in Beijing, July 2011. JASON LEE / REUTERS

In March 2009, a few months after the outbreak of the global financial crisis, the governor of China’s central bank, Zhou Xiaochuan, published an essay on the bank’s website. Zhou criticized the international monetary system for “the inherent deficiencies caused by using credit-based national currencies” and praised the Special Drawing Right (SDR), the synthetic currency created by the International Monetary Fund (IMF). The SDR “serves as the light in the tunnel for the reform of the international monetary system,” Zhou wrote.

Zhou’s call for a greater role for the SDR attracted attention around the world. Many observers viewed his comments as a sign of China’s readiness to challenge the U.S.-dominated international monetary order. Indeed, several years later, in 2015, China got its own currency, the renminbi (RMB), admitted to the SDR basket, which the year before had included only the dollar, the pound sterling, the yen,

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