Sean O'Grady: The yuan should take over, but we need not write the dollar's obituary yet

For the bulk of human history gold was the global currency; then came sterling, whose rise accompanied Britain's ascent to workshop of and banker to, the world.

When Britain commanded half of world trade, it was natural that the pound was used in international transactions. Between the end of the First World War and start of the Second, it was supplanted definitively by the dollar, though the "sterling balances" held by former colonies and others were to serve as a nuisance to British economic policy making well into the 1970s.

It was America's rise to industrial and commercial pre-eminence that did for sterling's status. Kennedy-era tax rules created a market for dollar-denominated securities in London, so the City managed to cling on to and expand its old imperial role, but that was another story. The dollar, backed by gold until 1971, became the world's reserve currency by default. It was so in the 1950s when the US was the world's largest creditor; and still in the 2000s when she had become the world's largest debtor, by far. The mark, the yen, and the euro never seriously challenged that supremacy. The Swiss franc, for much of this time backed by gold, won the award for best supporting artist.

What ought to happen now is that the Chinese yuan should take on more of the dollar's old role, either alone or in a "basket" with the euro and gold. China, after all, is emerging as the major industrial force in the world and its trade surpluses and reserves are as extensive as America's once were.

There are, though, some substantial obstacles to this seemingly logical journey. First is the reluctance of Beijing to see the yuan become fully convertible, making for a relatively tiny and illiquid market in Chinese government securities. The Chinese leadership fear full convertibility of the yuan into foreign currencies because it would push the yuan higher and hit exports. This may be precisely what the world economy needs to resolve those famous "global imbalances" and end America's appalling trade deficits, but China is unwilling.

Second, and without being indelicate, there is some political risk attached to China. Centuries of foreign invasion, oppression and dismemberment have left her leadership determined to hold their nation together; but the fact is that her government and her currency have been through revolutions, and defaults, before.

Third, no one can be quite sure that China's rise is inevitable. In the late 1980s, the "Japanese 21st-century" idea was in vogue. That lasted for about 18 months before the bubble economy imploded. The same may happen to China, and sooner than we suppose.

It took about 60 years for sterling to finally shrug off its post-imperial role; it may take even longer to unwind America's obligations. We need not write the dollar's obituary yet.

Triple-As: the companies set to rate above the US

Microsoft

The world's largest software company was set up by Bill Gates, once the world's richest man, and Paul Allen. Although Mr Gates has since left to focus on his philanthropy, the company is still a cash machine, making its debt among the safest in the world, and in line to rank above the Treasuries when rating agencies downgrade US debt.

ExxonMobil

The world's largest oil company is a descendant of John D Rockefeller's Standard Oil and was formed in 1999 by the merger of Exxon and Mobil. With oil hovering close to record highs, the group's cash flows are likely to grow larger than ever, potentially making its bonds an even safer bet.

Johnson & Johnson

The pharmaceuticals, medical devices and consumer goods group which, though probably best known for its baby products, sells so many different goods that it's found in most US homes.

Automatic Data Processing

Based in Roseland, New Jersey, ADP offers a vast array of the kind of things that might be boring, but which businesses can't do without, such as human resources, payroll, tax and benefits administration for about 570,000 clients.