China’s authorities can enable the renminbi to become a reserve currency without fully liberalising capital markets, argues a working paper co-written by Barry Eichengreen.

But to do so, the authorities will need to build up large reserves of US dollars, argues the paper, published by the Banque de France. The paper challenges those observers who argue China’s capital markets must be liberalised before the renminbi becomes a reserve currency.

This was the pattern followed by other currencies