Guide a layman, what if most countries start trading in yuan ,rubble or regions in their own currencies will it bring dollar price down, and if US$ collapse what would happen to debts of countries
Not necessarily. Most countries hold USD in reserves not because it's the most traded currency, but also because the US has the most advance, liquid and deepest financial markets by far. There's a wide range of securities to invest in from treasuries to bonds to equities.
Even as a retail investor, I invariably venture into the US markets because they have the most vibrant and dynamic companies across a wide range of industries which offer good returns with track record. If you are a large hedge fund or SWF which handle billions to trillions, you basically can't avoid the US financial markets if you want to optimize your portfolio because only they have that deep pool of financial assets to absorb your capital, diversify the risks, and offer good returns.
If you are in charge of a SWF with $100bil fund, will you invest a large part of the funds in Chinese assets? If so, how are you going to allocate your capital in China notwithstanding their strict capital controls? Are you going to buy their properties, their largest asset class, which are illiquid and generate little yield? Or invest in their casino stock market, which is dominated by SOEs and where prices are not necessarily determined by the market? Why do you think their top private companies like Alibaba, Baidu, Tencent, Xiaomi etc are not listed in mainland China? Can their financial reporters freely report negative news about SOEs to inform investors without approval from some cadre or whatever official it is? Can Chinese investors freely access foreign news?
You see, it's not just economic reforms but also major legal and political reforms they have to carry out for foreign investors to participate in their markets. Transparency, reliability, rule of law are very important, and in these aspects they still have a long way to go. It's not just becoming the second largest or largest economy and the RMB will naturally become the preeminent reserve currency. In the first place I don't have to hold my reserves in your currency to trade with you, and similarly you don't have to hold your reserves in my currency to trade with me. That's why despite China as the largest trading country, the world only holds 2.88% of their reserve currency in RMB.