Question

paper:what could possibly be the world’s reserve currency in 2120?

Answer 1

World’s reserve currency in Year-2120 - YUAN:

A reserve currency, also termed as anchor currency refers to a foreign currency which is held in huge quantities by central banks or other monetary authorities as part of it's foreign exchange reserves. The reserve currency can be used in global investments, global transactions, and all aspects of the international economy. In 1914, the first U.S. dollar upon the creation of the Federal Reserve Bank was printed. Later in less than six decades, officially the dollar became the world’s reserve currency. The US dollar earned the global position as the world’s leading reserve currency because at the end of WWII country had the world’s largest economy, and was highly trusted by the rest of the world.

Today China wants it's country's currency to replace the U.S. dollar i.e. yuan replaces U.S. dollar to provide more control over its economy. As trade grew, so does the popularity of yuan. International Monetary Fund on November 30, 2015 awarded the status of reserve currency to yuan. Moreover IMF on October 1, 2016 also added the yuan to its Special Drawing Rights. China's yuan during the prior decade had been gaining strength. Also the quantitative easing and huge budget deficits in U.S. will eventually have the effect of cheapening the dollar and as a result there is no longer the reserve currency.