As the figure shows, the size of the financial sector relative to GDP grew for nearly 50 years but declined after the financial crisis and has only started increasing again this year. From the perspective of financial stability, there are two important dimensions along which the categories of institutions in figure 1 differ.
In recent decades China has already increased over 130-fold its bilateral trade in goods with emerging markets and developing economies, with the country also becoming the world’s top exporter. [13] And recent research indicates there is a significant correlation between a country’s trade with China and its holdings of renminbi as reserves. [14] New trade patterns may also lead to new alliances.