Former Fed chief says China must deepen markets to globalize yuan

Charles Evans, former president of the Federal Reserve Bank of Chicago, offered a fresh perspective on yuan internationalization during the UBS Asian Investment Conference in Hong Kong. He highlighted the enduring advantages of the US dollar, such as deep capital markets and vibrant Treasury debt trading, as a blueprint for China. However, he stressed that full currency convertibility remains a major challenge for Beijing. His comments come amid growing criticism over the weaponization of the dollar, US debt sustainability, and policies under President Trump.

Evans noted that China has a unique window to promote the yuan globally by deepening domestic financial markets, similar to how the dollar and euro evolved. He also warned that surging costs in the US are likely to hit inflation data harder and longer than expected, adding uncertainty to global economic conditions. Beijing has been steadily promoting the yuan's overseas use since 2009, but achieving reserve currency status requires overcoming significant structural hurdles like capital account openness and financial market depth.