18:30 ▪
Four
Minimum read time ▪ up to
Several countries, including China, are seeking to reduce their dependence on the dollar by promoting the use of their currencies in international transactions. However, despite the ambitious currency diversification attempts undertaken by this BRICS member, some experts remain skeptical about their success. According to their analysis, the dollar will withstand external pressure and maintain its dominance over the Chinese currency.
China is trying to overshadow the US dollar
China is stepping up efforts to reduce the dollar’s dominance in global trade. China seeks to establish its currency as a viable alternative to the dollar by encouraging the use of the renminbi in international transactions, particularly through bilateral trade agreements with BRICS members such as Russia. It recently conducted $260 billion worth of renminbi transactions with Russia, intentionally excluding the dollar from these transactions.
This initiative This is part of a broader picture in which BRICS countries are also considering developing a common digital currency independent of the US dollar-led financial system. This ambitious project aims to create a multipolar financial structure in which the dollar is no longer the only global reserve currency.
Meanwhile, the United States faces domestic economic challenges that are contributing to the deterioration of the dollar’s position. Economic indicators such as rising national debt and economic uncertainty have raised concerns about the currency’s stability and continued attractiveness as the world’s reserve currency. Although this situation may favor the efforts of the BRICS countries, the dollar remains the currency of choice for many global economies.
A lost cause for China?
Despite the Chinese government’s significant efforts to internationalize its currency, the renminbi remains hampered by strict capital control policies and limited international liquidity. These restrictions have contributed to global markets’ reluctance to adopt the renminbi on a large scale.
Morgan Stanley analyst James Lord warns that without significant liberalization of China’s monetary policy and further opening of its capital markets, the yuan cannot seriously threaten the dollar’s hegemony. Although the Chinese government’s strict control measures are aimed at stabilizing the renminbi, they paradoxically limit its adoption as a global currency.
Furthermore, the recent real estate crisis in China and signs of weakness in other economic sectors have increased uncertainty about the renminbi’s long-term viability as a strong competitor to the dollar. Despite China’s ambitions, the strength of the US economy and global confidence in the dollar continues to strengthen its position as the preeminent reserve currency. Analysts estimate that the dollar could survive the turmoil and outperform the BRICS member’s currency.
Maximize your Cointribune experience with the Read to Earn program! Earn points and access exclusive benefits every time you read an article. Sign up now and get rewards.
Click here to join Read to Earn and turn your passion for cryptocurrencies into rewards!
Toulouse Scientific Diploma and Certification Consultant Alila Blockchain Exam Rejoined 2019 Coin Tribune. Examining the potential of blockchain in the field of economics, and the relationship between public sensibilities and information providers that will bring about a certain evolution of the social system for learning economics. The month is about understanding blockchain and its opportunities. Analyze the purpose of reality, decipher trends in Marche, analyze innovative technologies and perspectives, and analyze social revolution in Marche.
Disclaimer
The views, ideas and opinions expressed in this article are solely those of the author and should not be construed as investment advice. Please do your own research before making any investment decisions.