US Treasury chief rejects yuan as reserve currency
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US Treasury Secretary Scott Bessent rejected the idea of the Chinese yuan achieving reserve currency status, citing capital controls and lack of convertibility.
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Treasury Secretary Scott Bessent speaks to reporters as he leaves a closed-door meeting with Republicans working on President Donald Trump's sweeping domestic policy bill, at the Capitol in Washington, Friday, June 27, 2025. (AP)
Scott Bessent, the US Treasury Secretary, dismissed the possibility of the Chinese yuan gaining reserve currency status, according to a statement made on Thursday.
In a Bloomberg TV interview, Bessent pushed back against the idea, stating, "It's a complete fallacy," and questioning, "They have a non-convertible currency. So how are they going to be a reserve currency?"
Bessent further argued that China does not meet a critical condition for reserve currency status, a freely convertible currency, explaining, "They also have 1.4 billion people who want to get their money out of China. They have capital constraints on taking out money, the sine qua non for reserve currency is that it trades freely."
The question of the euro
Bessent referenced recent remarks by ECB President Christine Lagarde, who suggested the euro’s moment may have arrived.
"But I can tell you, if the euro hits 120, Europeans are going to be squawking that it is too strong. They are an export economy," he added, cautioning, "so let's see what happens. They should be careful what they wish for, whereas in the United States, we recognize responsibility that comes with being a reserve currency."
Trading data revealed that on Monday, the US dollar index dipped below the 97-point mark for the first time since March 1, 2022, sliding to 96.98 before edging back up to 97.05 by 07:02 GMT, a 0.36% decline, while the euro climbed to $1.1739.
