Not By Yuan Alone: Whole Set of National Currencies To Deep-Six US Dollar Dominance
- Not By Yuan Alone: Whole Set of National Currencies To Deep-Six US Dollar Dominance
by Ekaterina Blinova, https://sputniknews.com/
The internalization of China’s yuan is gaining momentum as Russia is set to use the currency in settlements with other world economies, while Brazil and China are ditching the dollar in bilateral trade. What does the trend spell for the greenback’s dominance?
“This trend greatly affects the US dollar[‘s] hegemony negatively, in both foreign trade and financial market transactions, since an increasing share of them is not denominated in US dollars but in other currencies, notably in yuan,” Sergio Rossi, professor of macroeconomics and monetary economics at the University of Fribourg, Switzerland, told Sputnik. “This weakens the US position with respect to global financial activities, as well as in regard to the influence of US economic policy decisions – particularly the US Federal Reserve’s monetary policy stance – across the global economy.”
“Asian countries, and in part also African countries, depend less on the US dollar than was the case in the recent past. The US economy is, therefore, in a much weaker position than used to be the case with regard to the US public deficit and the possibility to finance it through the purchase of US government bonds by foreign countries’ financial institutions – such as the People’s Bank of China. The US is thereby losing its ‘soft power’ across the global economy and financial markets, as it is clear that the world is becoming multipolar, which rebalances this ‘soft power’ with, among other things, some sort of a multicurrency international monetary regime,” Rossi continued.”