Report: China's yuan to erode, not end, dollar's dominance

A report from a federal watchdog predicts that China's yuan will chip away at the U.S. dollar's dominance over the next decade but is unlikely to supplant it as the world's top currency.

The study issued Thursday by the U.S.-China Economic and Security Review Commission says the yuan will likely gain ground at the expense of the Japanese yen, euro and British pound and "may slightly erode" the dollar's status.

Written by Cornell University economist Eswar Prasad, the report predicts that China will allow its tightly controlled financial system to "become largely open within the next three to five years."

But it says Beijing must enact broader reforms before the yuan can join the dollar as a "safe haven" currency, sought after by investors in times of crisis.