top of page

The Chinese Yuan threatens the Dominance of the U.S. Dollar


Recently, the BRICS (Brazil, Russia, India, and China) came together to find a monetary solution that will enable them to no longer be subject to the influence of the US Dollar. And this solution is to adopt the Yuan as the new international currency of exchange. Prior to this decision, the dollar was the currency used for international commerce. Even countries with very high inflation such as Argentina or Zimbabwe use the U.S. dollar to make important purchases such as purchasing a house. Indeed, the Chinese Yuan is strongly increasing in value as more countries are becoming open to the idea of using the Yuan as the new currency to conduct international trade. The main question that everyone inquires about is whether the Yuan will replace the Dollar.

It is essential to stress that the Yuan, also known as the Renminbi, is not yet the world's currency. While the Yuan has been increasing in global usage and acceptance in recent years, it is still not as widely used as other major currencies such as the US dollar, the Euro, and the Japanese yen. One of the reasons for this is that the Chinese government still maintains strict controls on the convertibility of the Yuan. This makes it difficult for foreign investors and businesses to hold and use the currency in international transactions. However, China has been taking steps to increase the Yuan's internationalization and promote its use in global trade and investment. For example, China has established currency swap agreements with a number of other countries, allowing them to conduct bilateral trade and investment in Yuan without having to convert to other currencies first. Indeed, the Chinese Yuan surpassed the Euro to become Brazil’s second-largest reserve currency. If the Yuan were to become the world’s leading currency, it also means that Chinese government bonds will become the new bonds to use to raise investment capital. However, it is fair to say that the Chinese government is neither the most reliable nor the most trustworthy government when it comes to transparency.

Adopting the Yuan is not merely limited to economic and financial purposes. There are also important political implications in the adoption of this currency. If the Yuan were to become the world’s currency, then China will become the most powerful country on the planet because the country whose currency is used as the international currency to conduct commerce is undeniably the most powerful nation in the world. In the nineteenth century, Great Britain was the most powerful country in the world because the Pound Sterling was the world’s currency. In the twentieth century, the United States became the most powerful country in the world because the U.S. dollar was, and continues to be used as the world’s currency. Now, Xi Jinping wants the Yuan to be the world’s currency because that will make him the most powerful individual and political leader on the planet. If the Yuan becomes the world’s currency, China will expand its political domination over the rest of the world because it will be in a position of power to change the rules of international commerce and influence how governments will be run.

Overall, while the Yuan is not yet the world's currency, it is likely to continue to grow in importance as China's economic and political influence expands. However, it is difficult to predict how long it will take for the Yuan to achieve this status if it ever does.

Comments

Rated 0 out of 5 stars.
No ratings yet

Add a rating

Subscribe to The Lake Street Review!

Join our email list and get access to specials deals exclusive to our subscribers.

Thanks for submitting!

bottom of page