China is pushing to elevate the value of the yuan, the Chinese currency, as trust in the dollar wanes by the day. Currently, the dollar is looking weaker due to America's rising debt, political uncertainties, and some uncertainty surrounding the banks. At the same time, China has been building its own financial systems, including a dollar-free payment network and a digital yuan. China is doing this in order to make it easier for countries to trade and invest without using dollars. China has also made deals with banks and shifted much of their overseas lending into yuan rather than the dollar. This move by China allows them to stay protected from US sanctions and gives other countries a reason to use the yuan.
With all this being said, the yuan isn't replacing the dollar anytime soon. Only a small percentage of global payments and reserves are in yuan. The dollar is still dominant, and that's why China is pushing for other countries to issue yuan-denominated bonds, along with using their new digital payment systems. Overall, China is more focused on creating a trade world where there are several strong currencies, and hopefully for China, that includes the yuan.
Article: China is ditching the dollar, fast
2 comments:
It will be interesting to see if other currencies become as widely used as the USD. We always hear about the devaluation of the USD but still always see it as the most dominating currency in the world.
It will be interesting to see whether the USD will maintain its dominance or not depending on how other foreign countries act towards major powers potentially abandoning the dollar. Or to see how the foreign exchange rates will play a bigger role within international trade.
Post a Comment