US dollar hegemony starts to crumble

[GeneralGogol]

I guess someone here does not know the difference between CNY and CNH. i.e the domestic onshore Renminbi with restrictions and the offshore Renminbi without . I was laughing my head off....lol

P.S Some people are not even aware which Renminbi they are talking about....lol. Education is key before people post something they read on substack .

I'm glad I made you laugh.

I'll take your predictions seriously when you convert all your net worth into Chinese currency (whichever one you prefer), park it in China and stop living in a "US vassal state" (in your own words) and move to a "Chinese vassal state". Until then your predictions are just empty words

 

[Martin Everson]

I'm glad I made you laugh.

I'll take your predictions seriously when you convert all your net worth into Chinese currency (whichever one you prefer), park it in China and stop living in a "US vassal state" (in your own words) and move to a "Chinese vassal state". Until then your predictions are just empty words

Lol...the above is what you write when I exposed your own ignorance

 

[Martin Everson]

De-dollarisation: Bangladesh ditches dollar, to pay Russia in Chinese yuan for nuclear plant​

De-dollarisation: Bangladesh ditches dollar, to pay Russia in Chinese yuan for nuclear plant

After the West imposed sanctions on Russia, Bangladesh was looking out for ways to settle $110 million for the Rooppur power plant which is under construction in the South Asian country

www.firstpost.com

I can see more countries keeping some Yuan In the mix of their reserves. Came in handy for Bangladesh .

 

[BalnearioCamboriu]

I can imagine Martin robbing his hands in gitty and excitement whist reading the news about de-dolarisation.

 

[FantomOffshore]

Who is going to hold deposits in Yuan at a Chinese bank considering it safe? I fail to understand how Western countries will consider the Chinese Yuan a reserve currency. Trade settlements sure, reserve currency, no.

 

[Martin Everson]

Who is going to hold deposits in Yuan at a Chinese bank considering it safe?

The IMF (International Monetary Fund) does . They hold more Renminibi than they do either JPY or GBP. CNY makes up over 12% of the SDR basket of currencies right now.

"The SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.

The SDR is not a currency. It is a potential claim on the freely usable currencies of IMF members. As such, SDRs can provide a country with liquidity.

A basket of currencies defines the SDR: the US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound."

What is the SDR?

What is the SDR? The SDR is an international reserve asset. The SDR is not a currency, but its value is based on a basket of five currencies—the US dollar, the euro, the Chinese renminbi, the Japanese yen, and the British pound sterling.

www.imf.org

You can then see below how many countries hold SDR's in their reserves.

SDR-Tracker

In August 2021, the IMF issued a historic US$650 billion in Special Drawing Rights (SDRs) to its member countries. This website tracks how countries are using their SDRs. Using IMF country reports, it compiles excerpts that provide information on the use of SDRs. The goal of this tracker it to...

www.imf.org

I fail to understand how Western countries will consider the Chinese Yuan a reserve currency.

Over 70 central banks around the world hold some Renminbi in their reserves including ECB. Countries including Germany, Italy, Spain, Belgium, France etc all do.

Trade settlements sure, reserve currency, no.

Well your clearly wrong. And rather than run of emotion when asking such a question how much time does it take to just do a quick google search before asking .

P.S The number of foreign participant banks joining China's CIPS (Cross-Border Interbank Payment System) is increasing each month also. Over 60 joined in March 2023 alone .

 

[troubled soul]

Iranian Professor: Saudi Arabia May Join De-Dollarization Shift as US Dollar Is Now 'Unreliable and Dangerous'​

Iranian Professor: Saudi Arabia May Join De-Dollarization Shift as US Dollar Is Now 'Unreliable and Dangerous' – Economics Bitcoin News

A University of Tehran professor and member of Iran's Presidential Delegation to China has stressed the importance of de-dollarization.

news.bitcoin.com

 

[FantomOffshore]

The IMF is not a central bank. Not sure why you are even mentioning it here, it has no place in a debate about reserve currencies since the SDR is just a reserve asset that can suplement its members, if it would not hold Remninbi with China as a member that would be quite peculiar.

What is a good indicator is central bank reserves. The Remninbi only accounts for 3% of global central bank reserves versus 60% for the dollar and 20% for the euro: The renminbi’s unconventional route to reserve currency status.

China’s financial system is less developed, its currency is not fully convertible due to capital controls, and it lacks true rule of law.

It has no significant offshore market (the Euro has 12x the amount of offshore deposits compared to China's currency).

If China does not want to liberalise its capital account its only way to the top would be through holding a lot of dollars, creating a multi-polar system of US/CN currency dominance. There is no path right now that goes to the Yuan taking over the world without also bolstering the dollar.
 
The current narrative about how the Remninbi is a threat to dollar-dominance is thus largely overblown. Remember that a reserve currency is different than a trade currency (CIPS increases trade and invoicing, not role as reserve).

I am sure the Remninbi will keep growing as a trade currency over the coming decades. Reserve currency, maybe, if they play their cards right. Right now it is definitely NOT a global reserve currency nor is it moving to be that way by a significant degree apart from the development of CBDCs.

 

[JackAlabama]

Who is going to hold deposits in Yuan at a Chinese bank considering it safe? I fail to understand how Western countries will consider the Chinese Yuan a reserve currency. Trade settlements sure, reserve currency, no.

I have my doubts lets say a rich Indonesian looking offshore wanting to hold all assets under custody in China. Maybe diversify a small portion.
I think we are not there yet for China to fill the void.

That will leave open space for Bitcoin as neutral reserve asset and offshore banking.

 

[Martin Everson]

The IMF is not a central bank.

Only you mentioned this. No one else did .

China’s financial system is less developed, its currency is not fully convertible due to capital controls, and it lacks true rule of law.

Firstly China has two versions of the Renminbi - the onshore (CNY) and Offshore (CNH). The offshore has no capital control and is what is used outside of mainland China. What you are referring to is the onshore Yuan (CNY) which is not what anyone outside of mainland China is going to be using.

See below to educate yourself .

Chinese Renminbi Differences: CNH vs. CNY | Airwallex US

Chinese Renminbi is the currency of Mainland China, but it's split into two types. Learn about Yuan, RMB and the key differences between CNH and CNY.

www.airwallex.com

--- quote start

Why are CNY and CNH different?​

CNY is government-regulated in an effort to facilitate control of China’s domestic currency and encourage trade between Chinese companies.

Foreign businesses who trade within mainland China can still accept CNY as payment. However, if they want to use Renminbi offshore, they’ll need to exchange CNY to CNH.

CNH, on the other hand, is designed as an offshore version of Renminbi. This way Renminbi can be freely traded according to the will of the free market. The free market determines its value, while still ensuring that China’s internal Renminbi remains strong.

---- quote end

 

[BalnearioCamboriu]

I think we are not there yet for China to fill the void.

What points to and proves it?

I am sure the Remninbi will keep growing as a trade currency over the coming decades.

How can you be sure about what'll happen in decades? Not only "I think", but "sure". One can't even predict what'll happen in several months.

 

[JackAlabama]

What points to and proves it?

A lot. One thing is what is a few posts up.

Doesnt mean we wont get there tho.
Multi polarity might be the more plausible outcome.

 

[FantomOffshore]

How can you be sure about what'll happen in decades? Not only "I think", but "sure". One can't even predict what'll happen in several months.

Ha, well, "sure" was a poor choice of word I agree. In general, I am not too sure about China which is why I don't bet money on them. Their leadership and direction seem relatively stable until it is not.

Firstly China has two versions of the Renminbi - the onshore (CNY) and Offshore (CNH). The offshore has no capital control and is what is used outside of mainland China. What you are referring to is the onshore Yuan (CNY) which is not what anyone outside of mainland China is going to be using.

And by what is the offshore Reminbi backed? It is backed by the same assets (foreign exchange reserves, gold reserves, and other financial assets held by the People's Bank of China (PBOC)) so essentially it is the same currency. This is also why the word Renminbi is used for both currencies in the column I posted.

I am sure you know a lot more about China than I do, but China does not currently have a major reserve currency threatening the US dollar, JPY, or even the Euro, nor does it look like it will have one over the foreseeable future.

The new bill the UAE has proposed today is what I hope, and think, but mainly hope, will be what will threaten the USD, EUR, JPY, and CHF. Creating a decentralized free zone with 100% tax exemptions with bank accounts not unlike Blackcatcard where you can simply deposit/accept payment in crypto from sanctioned people.

This would allow you to do business with people all across the world at very little cost and avoid predatory foreign exchange fees by middlemen, a true win for open business. It would also insulate everyone in the zone from sanctions as crypto is not controlled by anyone. One can only dream...

 

[Martin Everson]

The new bill the UAE has proposed today is what I hope, and think, but mainly hope, will be what will threaten the USD, EUR, JPY, and CHF.

You posted a consultation paper. Why do you call it a bill?

 

[FantomOffshore]

You posted a consultation paper. Why do you call it a bill?

That was in the headline, I wanted to edit that but was not able to anymore.

This part is of particular interest:

The deadline for providing comments on the proposed framework is Friday, 12 May 2023. After receiving your comments, we shall consider whether any modifications are required to the proposals, and the ADGM Board of Directors (Board) will then proceed to enact the proposal in their final form.

The speed at which the bureaucratic process is moving in Abu Dhabi is quite cool.

 

[BalnearioCamboriu]

(US): "Et tu, Brute?" -- "You too, India?"

 

[Martin Everson]

Yuan overtakes dollar to become most-used currency in China's cross-border transactions​

Yuan overtakes dollar to become most-used currency in China's cross-border transactions

The yuan became the most widely-used currency for cross-border transactions in China in March, overtaking the dollar for the first time, official data showed, reflecting efforts by Beijing to internationalise use of the yuan.

www.reuters.com

China's small steps on offshore use of yuan are starting to add up​

China's small steps on offshore use of yuan are starting to add up

China's yuan currency is slowly but surely being adopted for more international payments, which analysts say could lay foundations for a trade system running parallel to the dominant U.S. dollar.

www.reuters.com

----

A parallel system to the dollar is a certainty. The question is how will US react.

 

[TheCryptoAnt]

The question is how will US react.

something like this

 

[BalnearioCamboriu]

Argentina too

Argentina to Ditch Dollar, Pay For Chinese Imports in Yuan

Buenos Aires is hoping the move will relieve pressure on the country's dwindling dollar reserves but switch is still a coup for Beijing

www.asiafinancial.com

---
The move comes just a day after it emerged the yuan overtook the dollar for the first time last month to became the most widely-used currency for cross-border transactions in China.

 

[FantomOffshore]

Argentina too

Argentina to Ditch Dollar, Pay For Chinese Imports in Yuan

Buenos Aires is hoping the move will relieve pressure on the country's dwindling dollar reserves but switch is still a coup for Beijing

www.asiafinancial.com

---
The move comes just a day after it emerged the yuan overtook the dollar for the first time last month to became the most widely-used currency for cross-border transactions in China.

It's quite nice for them to pay in Yuan so they don't have to drain their dollar reserves for Chinese transactions.