Shigeyuki Abe: This paper gives an interesting and informative analysis through a superb literature survey and empirical tests of whether the renminbi (RMB) can be either a global or a regional currency. The idea set at the beginning is clear and the authors’ conclusion is sharp because both negative and positive arguments for the RMB as a key currency are explained and no concrete future direction is shown, reflecting the fact that the paper has not only two views but also two authors.
Negative arguments are that the RMB is different from the US$, China has dubious macro statistics, and global currency requires more than RMB. The US$ was initially linked with gold until 1971 and hysteresis has kept the US$ as a strong global currency. Global currency rests on amazingly high score macro statistics, but China has questionable macro statistics. In particular, important conditions that China does not fulfill...