There are not doubts, being China the biggest trading partner for any country in the world , that Yuan will increase its weight as currency reserve , but its limitation and the relative size of domestic capital market will not be functional in replacing the dollar. Chinese pragmatism and long term view approach scarcely adapt to rapid shift at expenses for stability , considering as well the over 2 tn $ of trade value with western partners .
The King Dollar is about to be Dethroned by Yuan…
Just a year after Russia- Ukraine war:
- China’s Yuan replaces US Dollar as most traded currency in Russia.
- China and #France complete first Yuan-settled LNG trade, signaling the end of using the US Dollar for these energy trades.
- US Dollar used in 59% of world’s reserves, down from 72%
- Saudi Arabia and China to build #refinery for 83.7 billion Chinese Yuan ($12.2 billion)
- China and #Brazil agree to use Chinese Yuan to settle trade rather than US dollars
- President of #Kenya tells citizens to get rid of US dollars.
- #India says they will settle trade in Indian rupees with certain countries rather than US dollars
- Chinese yuan passes #Euro to become Brazil's second-largest currency in foreign reserves
- #Malaysia, a year after the invasion of Ukraine China to Discuss ‘Asian Fund’ to Cut US Dollar Dependency
#Exporting #Inflation, #Sanctions,
Forcing emerging economies to purchase dollars for #oil and #weapons ,
and systemic instability have people looking for alternatives.
It took 7 years (1971-1978) to establish new petrodollar regime (Bretton Wood II)). I do believe it will take at least the same amount to create an alternative. Many people are surprised by the acceleration in dedolarisation described by the circumstances invoked in the discussion thread. However, these are only the first steps towards changing the global monetary regime. According to Zoltan Pozsar, the new regime will be commodity based and towards strategic commodities there will be a stable exchange rate. This represents the opposite of the current arrangements, in which, in particular, the short-term volatility of commodity valuations is very high. This new currency regime was coined by above-mentioned author as the ‘Bretton Woods III’. The use of the yuan for international transactions appears to be a rather transitional but feasible solution, given that China has the industrial capacity to cover the value of such an international currency with real goods. Any national currency will be subject to the negative effects previously experienced by the US dollar as a debt-based reserve currency. Observing the discussion for an alternative reserve currency within BRICS and SCO fora, in which participating countries would gain access to international liquidity on the condition that they provide a 40% contribution in gold, it is difficult to be optimistic about the actual creation of such a system. It seems that mutual agreements to trade in national currencies are and will continue to be the fuel for dedollarisation in the near future.
De-dollarization is not simple nor will it be a fast switch to something else, e.g. Chinese renminbi (RMB) and yuan. However, It is possible for the Chinese yuan to gain greater global influence and recognition in the future, but China's financial system still has many technical limitations, with respect to openness and transparency. Such monetary processes and shifts depend on how consistent a particular currency is in terms of being able to build a sense of trust and managing market stability.
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Paper money eventually returns to its intrinsic value - zero.
Voltaire
https://www.investopedia.com/trading/chinese-devaluation-yuan/#:~:text=The%20U.S.%20government%20was%20particularly,that%20could%20increase%20trade%20tensions.
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