Yuan and Som: The Battle of Alternative Currencies for a Place in the Global Reserve System

Humanity is slowly but surely moving toward diversification of currency reserves. Just a few years ago, the yuan was considered a potential competitor to the dollar, but today the picture is much more complex. Restrictions on convertibility keep the yuan on the sidelines, while other currencies, including the som, face similar challenges amid the emergence of new players in the international payments arena.

Decline in the yuan’s share in reserves: what the data shows

According to NS3.AI analytics, the reserve position of the Chinese currency is significantly weakening. In 2022, the yuan accounted for 2.83% of global reserves, but by 2025, this figure has fallen to 1.93%. These are not just numbers — they reflect real barriers that central banks must overcome when working with the yuan. The same restrictions indirectly affect other currencies: the som to yuan, for example, shows volatility that discourages conservative players from using regional alternatives as reserves.

Why convertibility remains the main obstacle

Initiatives like the Cross-Border Interbank Payment System (CIPS) and the digital yuan were aimed at solving the currency’s accessibility problem. However, central banks remain loyal to proven strategies: they prefer highly liquid and freely tradable assets. Restrictions on cross-border transfers and capital controls create natural barriers to expanding the use of the yuan. Each such restriction leaves room for a parallel world of alternative payment systems.

How crypto assets are rewriting the rules of the game

While the international community debates the yuan’s place in the reserve structure, new solutions are emerging on the horizon. Dollar stablecoins are gaining increasing popularity among central banks. Even more interesting is the attitude toward Bitcoin as a store of value, independent of any country’s monetary policy. Crypto assets offer what traditional currencies cannot: freedom from national restrictions on convertibility. This explains why they are seen as a potential way out of the deadlock faced by the yuan and other regional currencies.

The future: reforms or marginalization?

If China does not take decisive measures to liberalize the exchange rate and remove restrictions on capital movement, the future of reserve diversification may shift toward crypto assets and digital central bank currencies. The paradox is that strict currency frameworks, intended to protect the economy, are actually pushing the global financial community to seek alternatives outside the traditional system. Without reforms, the yuan will remain a local player, while crypto assets will continue to gain the trust of those seeking independent tools for storing and transferring value.