Quite a bit of commerce is done in dollar denominated contracts. If you’re a European company, that means you have a built in interest rate risk every time you buy or sell. European companies may hold dollar deposits to smooth the risk, as they need dollars for future transactions, so there isn’t an immediate need to convert all at once. However, at this point, they should be pushing for Euro denomination on some contracts for commodities. Certainly, the Yuan isn’t acceptable.

As the US begins flirting with erratic, dangerous, and radical policy ideas, the value of the dollar itself will diminish. Part of the issue with accepting the Yuan, is the goals of the Chinese government will result in unwanted currency manipulation. The easy, lazy, and stupid retort is ‘America also manipulates.’ For the most part, America has kept the dollar relatively strong, meaning that imported goods had an advantage, along with American consumers. The Chinese would take the opposite tack, making their currency cheap and promoting its own exports. As they engage in their cycle of capturing the technical aspects of producing a product, withering the foreign expertise in producing the product, and retaining their dominance once the lock up the technology.

Also, this would encourage other countries to adopt the Euro as a reserve currency. I don’t think there’s any economist worth their salt, looking at gold returning as a reserve, that is happy about the current state of reserve currencies. Washington is making the dollar more toxic every day and I think there are countries dying to find an alternative. Right now the Euro has a small plurality of reserves (20%-ish). That could bloom by just moving more contracts for commodities to the Euro, where the dollar is currently used.