Systematic international trade has its roots in the powerful and wealthy Roman Empire. In fact, the word “pay” derives from the Latin word “pacare” which originally meant to pacify using an appropriate unit of measurement that appeased both parties involved in the aforementioned transaction. Over two millennia later, imperialist Britain found itself in a similar position with the pound circulating freely through its many colonies as the de facto mode of payment for all trade that took place when the colonies were prohibited from exporting goods. The failure of the gold standard and the victory of World War II paved the way for the dollar. After World War II, faced with a weakened Britain, a shattered France, and a devastated Germany, the United States government adopted protectionist policies by undervaluing the dollar to stimulate international exports while imposing high import tariffs. This allowed the US dollar to establish itself as the leading international currency. Over time, starting in the 1970s, Japan had replaced Germany as the second largest economy with a surge in international exports that resulted in vast trade surpluses and huge foreign exchange reserves. This phase ended in the 1990s when the over-valued yen bubble burst, putting Japan into a phase of stagflation for the next two decades. Even so, the yen at its peak accounted for only 9% of the world's foreign exchange reserves as over 90% of yen bonds were held domestically. As a result, the rise of the US dollar, aside from the previously mentioned global events, has basically been supported by the triad: highly developed financial markets that operate transparently, high levels of easily interchangeable liquid assets, and the support of a relatively stable government and business-friendly. Cancel... middle of paper... your destiny as you navigate the path with the utmost dexterity and diligence. This brings me to the original question: Will the Renminbi emerge as an international reserve currency? My answer would be a firm and emphatic yes! As of 2012, China is at the first step in its plan to internationalize the RMB by establishing itself as a trade settlement currency, then aiming to become an investment currency before finally becoming a true reserve currency. However, the time and global conditions under which this might happen are highly uncertain, perhaps 20 or even 30 years from now. Again this would be an addition to the dollar and the euro and not a replacement. All of this is true, assuming China continues on its path of growth, liberalization and internal reform without creating negative shockwaves. The world watches as the crouching dragon raises its head.