Yuan’s Slide Is Gold Standard Moment for China

China allowing the yuan to slide below 7 to the dollar is a watershed moment for currency markets that's symbolically equivalent to the U.S. and other countries abandoning the gold standard in the interwar period, or the collapse of the postwar Bretton Woods system of fixed exchange rates four decades ago. The implications for the global economy are equally significant.

The world’s major currencies aren’t tethered in the way they were in those periods, but gold and Bretton Woods both served as anchors for the world’s monetary system, and their demise reflected the economic and political disarray of their times. Today, the yuan is semi-pegged to the U.S. dollar. The arrangement serves as an anchor for China’s financial system, now the world’s largest by assets; for many currency systems in Asia and around the world; and for U.S.-China economic and financial relations.