ECB Executive Board member Benoit Coeure’s interview with China’s Caixin magazine includes several interesting nuggets. Not only did he warn that QE could end by October, he also disclosed that the central bank sold dollars in June to add the Chinese yuan to its foreign reserves. The amount was relatively tiny — equivalent to 500 million euros, or 1% of the ECB’s reserves. But the change, along with a swap line with the PBOC, is an “acknowledgement of the growing international role of the renminbi,” and there will be further steps in the future, Coeure said.
It’s hard to argue that the dollar will be dislodged as the main reserve currency any time soon. But it’s not difficult to imagine that its share in global reserves will decline from the current 64% as central banks make room for the yuan or boost the share of the euro from a historical low of 20%. The reserve diversification is just another long-term hurdle for the dollar.