Harvard economist Kenneth Rogoff believes the Chinese yuan will become a global reserve currency within five years. He argues that President Xi Jinping’s explicit call for yuan internationalization marks a turning point.

Rogoff says investors worldwide are desperate to diversify away from the US dollar, making China’s push well-timed.

China’s Path to Reserve Status

In a recent interview with the South China Morning Post, Rogoff outlined the key steps China must take. Beijing needs to open its government bond markets to foreign investors. It also needs forward markets and interest rate swaps to support international participation.

Rogoff noted that fully open capital markets are not required. The US itself maintained many…