AsianFin -- If China continues to grow its economy, avoid crises, expand yuan-denominated assets accessible to foreign investors, and build market confidence, the share of the Chinese yuan in global foreign exchange reserves could rise well beyond its current 2 percent, according to Shan Hui, chief economist at Goldman Sachs’ China arm.

Drawing lessons from the British pound’s decline and the rise of the U.S. dollar, Shan noted that changes in the world’s dominant currency are rare. Over the past 150 years, the only example has been the pound yielding to the U.S. dollar—a transition offering three key insights for currency internationalization.

First, achieving the status of a leading global currency takes a long time, Shan said. Second, the policies and actions of both the challenger and the incumbent currency nation shape the rise and fall of a currency’s international use. Third, major recessions and severe economic downturns can delay or even prevent a currency from gaining international prominence.