Comment by jmyeet

The euro isn't a contender for two main reasons:

1. Europe is still dependent upon the US military and, as a consequence, is beholden to US foreign policy; and

2. No unified fiscal policy.

As for the unsuitability of the yuan, there are several reasons:

1. The yuan was once pegged to the US dollar. It's now pegged to a basket of currencies instead. This, by definition, makes China a currency manipulator because you wouldn't need to peg the currency otherwise;

2. The yuan is undervalued by this manipulation. It should really be more expensive, making China's exports more expensive. China does this to maintain their export competitiveness. If anything, increased demand for the yuan would be unwelcome as it would increase the pressure to appreciate the yuan;

3. China runs a trade surplus. It's basically inevitable that the country with the reserve currency will run a deficit;

4. The US running a government deficit is actually kind of a good thing for maintaining a reserve currency. China, for example, holds trillions in US government bonds. Do you really think they want to upset that apple cart?