Dollar reserve status faces structural test as renminbi clears Europe
62%. That is the probability the renminbi's share of global central bank reserves exceeds 8% within seven years — up from 2.3% today — conditional on Deutsche Bank's clearing infrastructure holding and at least two more European institutions following within eighteen months. Deutsche's move is not symbolic: it is the friction-reduction event that Hayek's aggregation logic says precedes adoption cascades. Dimon is right that military power underwrites reserve currency status — he is wrong that the mechanism is direct. It works through confidence in institutional continuity, and export controls that demonstrably hurt American firms faster than adversaries are eroding exactly that confidence. The dollar doesn't lose reserve status in a crisis. It loses it in a sequence of frictionless alternatives.
What is the minimum number of clearing institutions required before the cascade becomes self-sustaining?
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