Driven by China's desire to increase its financial clout, the Chinese renminbi is likely to emerge gradually as a genuine international currency as the country has been easing restrictions on its use in transactions and investments abroad.
During the coming period of uncertainty and transition, asset managers at central banks around the world are likely to be more interested in gold as a result of doubts about the overall strength of global monetary arrangements, the report said.
"China has no wish to be unduly dependent on either the dollar or the euro. This is likely to have been an important reason why the Chinese authorities have decided in recent years to boost the share of gold in reserves," the report said.
The re-balancing process of the global economy through China's economic rise will occur gradually rather than abruptly and will not be straightforward. In particular, the move toward full renminbi convertibility is likely to be only gradual, the report added.
Although the renminbi's rise as a reserve currency is unlikely to pose any immediate threat to the US dollar, "during this period of change and transition reserve holders will spread their investments into a relatively wide range of assets and sectors," the report said.
While the Official Monetary and Financial Institutions Forum does not envisage a return to a gold standard, gold will increasingly have a renewed role in the global monetary system, attracting a higher level of attention from policymakers and financial market practitioners, the report added.
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