A senior Chinese official assuaged some of concerns surrounding the USD, saying that while reserve managers will diversify to a greater extent in the future, the U.S. currency will keep its dominant international role. Guan Tao, who is senior at China’s SAFE (State Administration for Foreign Exchange), said that the risks of U.S. inflation and dollar depreciation are like “blocked dams,” but noted that diversification would bring risk of greater turbulence in non-dollar currencies and that “in reserve currencies, the more currencies is not necessarily the better.” It should be noted that Tao wrote these comments, which appeared in the Chinese language International Economic Review (and cited by Reuters), in a personal capacity.
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