China’s Yuan Reserve Currency Plot To Depose Dollar Dates Back Years

China has long-planned for a yuan reserve currency to undermine the U.S. dollar.

To get some idea of how far ahead China’s leaders planned, consider that the People’s Bank of China (PBOC) made its first move way back in 1994 – more than 20 years ago.

That’s when the PBOC first pegged the yuan reserve currency to the U.S. dollar. And it was part of a series of market reforms intended to enhance the growth of the Chinese economy and put it on a path to challenge the United States.

In 2005, China modified the yuan currency peg to include a basket of world currencies. That allowed the yuan to appreciate 25.8% by 2009 – a key step toward preparing the yuan for yuan reserve currency.

The financial crisis of 2008-2009 presented China with an opportunity to suggest a major change to the global financial system – a change that would include a yuan reserve currency.

In particular, PBOC Governor Zhou Xiaochuan proposed in March 2009 that the “Special Drawing Rights” (SDR) of the International Monetary Fund (IMF) be expanded into a “super-reserve currency” that would replace the U.S. dollar.

Why the CIA, FBI, Army, and Navy Are Preparing Now for the Fall of the U.S. Dollar

In his proposal, Zhou strongly hinted that the yuan be included in the SDR’s basket of currencies, currently made up of the dollar, the pound, the yen, and the euro.

Shortly afterward, China quietly started making deals with countries like Brazil, Russia, and Vietnam to settle bilateral trade deals in yuan instead of dollars.

These moves and several others succeeded in raising the yuan’s standing in world trade. According to the Society for Worldwide Interbank Financial Telecom (SWIFT), the yuan rose from 35th as a global payment currency in 2010 to fifth as of June of this year.

A Yuan Reserve Currency Makes the Dollar a “Product of the Past”

By 2011, Chinese President Hu Jintao was publicly dismissing the reserve currency status of the U.S. dollar as a “product of the past.”