NEW YORK - China is playing a pivotal role in the structural change of the foreign exchange market, said a report issued by the international investment bank UBS on Thursday.

"While Chinese currency renminbi or yuan is still in the early stages of internationalization, key drivers are in place to broaden its relevance and it has the biggest potential to play a more important role in the long term," said the report on investing in emerging market economies.

A more uncertain global environment might support the US dollar due to its safe-haven characteristics, but longer-term dynamics could result in a transition away from the greenback, said the report.

"We project the US dollar to weaken in the decade ahead," as global USD-centric system will face challenges in the 2020s, the report said, adding the global currency landscape is likely to become more diverse.

Rising public debt and more populist policies have stoked worries about the longer-term outlook of the US dollar, said the report.

Still, the process would be gradual given the US dollar's global dominance and deep and liquid financial markets in the United States, which would be hard to replicate in the near future, the report said.

Meanwhile, the euro remains critical in a regional context and could gain more relevance in the longer term especially in times of a weak US dollar, the report said.

Businesses and investors have to prepare for a more diverse currency landscape while the US dollar is expected to maintain a dominant role, said UBS.

Demand may grow for trade invoicing in currencies other than the US dollar and having the technological capabilities to support this may become a competitive edge for companies, added UBS in the report.