China Ditching Dollar for Own 'Redback'

By Jason Farago,  Newser Staff
Posted Aug 3, 2009 5:46 AM CDT
A migrant worker reacts as he receives his delayed wages in Shenyang, Liaoning province, China.   (AP Photo/EyePress, file)
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(Newser) – China is speeding up efforts to encourage the use of its currency in international trading, with analysts predicting that the Chinese renminbi will become one of the three top currencies by 2012, reports the Times of London. In recent months Beijing has inked currency-swap deals with central banks from Korea to Argentina and expanded the currency's use in financial powerhouse Hong Kong. It's a major change for China, which holds trillions in US currency.

China's massive dollar holdings and export-driven economy make it vulnerable to losses if the American currency loses value. Internationalizing the renminbi may still take some time, not least because investors may be nervous about the Communist Party's willingness to keep its hands off. But one HSBC economist says that after the pound in the 19th century and the dollar in the 20th, the rise of the "redback" is "long overdue."