U.S. Dollar to Remain Dominant Despite RMB Internationalization
China, United States
In recent months, a growing chorus of analysts has argued that the U.S. dollar’s dominance is waning, with China’s renminbi (RMB) emerging as the leading replacement.
Other analysts, however, take a more circumspect view. They concede that some countries are moving to use currencies other than the USD for trade and reserves purposes, but doubt that the RMB will systemically replace the dollar anytime in the foreseeable future. The Asia Group assesses that most evidence supports this view.
China and Russia are clearly motivated to ramp up RMB use to settle trade transactions because of the U.S.-led sanctions against Moscow. Those sanctions have frozen much of Russia’s foreign currency reserves and removed major Russian banks from SWIFT, which facilitates most international banking transactions.
TAG China Country Director Han Lin noted, “Yet though the core issues of the U.S.-China rivalry – such as technology ...
Alison Szalwinski in DW: ‘Washington’s tumultuous trade negotiations — from China to India to Korea — have left many of its Asian allies questioning whether the United States still sees economic integration as a strategic asset or a bargaining chip’
Szalwinski from The Asia Group said that countries have been hedging for some time by “doubling down on smaller, results-oriented ...
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U.S. Dollar to Remain Dominant Despite RMB Internationalization
In recent months, a growing chorus of analysts has argued that the U.S. dollar’s dominance is waning, with China’s renminbi (RMB) emerging as the leading replacement.
Other analysts, however, take a more circumspect view. They concede that some countries are moving to use currencies other than the USD for trade and reserves purposes, but doubt that the RMB will systemically replace the dollar anytime in the foreseeable future. The Asia Group assesses that most evidence supports this view.
China and Russia are clearly motivated to ramp up RMB use to settle trade transactions because of the U.S.-led sanctions against Moscow. Those sanctions have frozen much of Russia’s foreign currency reserves and removed major Russian banks from SWIFT, which facilitates most international banking transactions.
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