Showing posts with label us dollar. Show all posts

Tuesday, April 29, 2025

The Global Push for Dedollarization

Trump’s Trade War
Peace For Taiwan Is Possible
The Last Age of War, The First Age of Peace: Lord Kalki, Prophecies, and the Path to Global Redemption
AOC 2028: : The Future of American Progressivism

The global financial landscape is undergoing a significant transformation as countries actively pursue dedollarization strategies to reduce reliance on the U.S. dollar. This shift is driven by geopolitical tensions, economic considerations, and technological advancements, signaling a move toward a multipolar currency system. (Tether is betting big on the U.S. dollar. Why it faces challenges from Trump's tariffs.)

🌍 The Global Push for Dedollarization

Historically, the U.S. dollar has dominated international trade and finance. However, recent developments indicate a concerted effort by various nations to diversify their currency usage:

China: Accelerating the internationalization of the yuan, China has expanded its currency swap agreements, promoted the use of the yuan in cross-border transactions, and enhanced its financial infrastructure to support yuan-based settlements. (China ramps up global yuan push, seizing on retreating dollar)
BRICS Nations: Countries like Brazil, Russia, India, China, and South Africa are increasingly conducting trade in their local currencies. For instance, Brazil and China have initiated trade settlements in yuan and reais, reducing dependence on the dollar.
Europe: The European Union is exploring the development of a digital euro to enhance monetary sovereignty and reduce reliance on U.S.-based payment systems. This initiative aims to provide a secure and efficient alternative for cross-border transactions within the Eurozone. (The battle for the global payments system is under way)

🔄 Bilateral Currency Agreements

Several countries have established bilateral agreements to facilitate trade in their respective currencies:

China and Russia: In response to Western sanctions, these nations have increased the use of the yuan and ruble in bilateral trade, fostering financial cooperation and reducing exposure to the dollar.
India and the UAE: These countries have agreed to conduct trade in rupees and dirhams, streamlining transactions and minimizing currency conversion costs.

Such agreements enhance economic resilience and reflect a broader trend of diversifying currency usage in international trade.

📈 Emerging Currencies Gaining Traction

As the dollar's dominance faces challenges, several currencies are poised to gain prominence over the next 10–20 years: (Digital (De)Dollarization? - Morgan Stanley)

Chinese Yuan (CNY): With China's growing economic influence and strategic initiatives, the yuan is increasingly used in global trade and finance.
Euro (EUR): The euro remains a strong contender, especially with efforts to deepen financial integration within the Eurozone.
Digital Currencies: Central Bank Digital Currencies (CBDCs) are emerging as potential game-changers, offering efficient and secure transaction methods that could reshape global finance.

💻 Technological Advancements Driving Change

Technology plays a pivotal role in facilitating dedollarization:

CBDCs: Over 130 countries are exploring or developing CBDCs to modernize payment systems and enhance monetary sovereignty. (Trump could spur central banks to adopt digital coins: Peacock)
Blockchain and Digital Platforms: Innovations like China's Cross-Border Interbank Payment System (CIPS) and the mBridge project aim to streamline international settlements, reducing reliance on traditional dollar-based systems.

These technological advancements offer alternatives to the existing financial infrastructure, enabling countries to conduct transactions more efficiently and independently.

🇨🇳 China's Digital Yuan: A Strategic Move

China's digital yuan (e-CNY) is at the forefront of its dedollarization strategy. By leveraging blockchain technology, the digital yuan facilitates secure and efficient transactions, both domestically and internationally. China's efforts to promote the e-CNY in cross-border trade and its integration into global payment systems underscore its commitment to reducing dollar dependence. (China just Launched Full De-dollarization with $1.2 ... - YouTube, US and China increasingly at odds over crypto, China ramps up global yuan push, seizing on retreating dollar)

⏳ Timeline and Outlook

While the U.S. dollar remains dominant, the momentum toward a multipolar currency system is undeniable. Over the next two decades, the combined impact of geopolitical shifts, economic strategies, and technological innovations is expected to gradually diminish the dollar's supremacy, paving the way for a more diversified and resilient global financial architecture. (de-dollarization: Trump threat of 100% tariff: Does the US have ...)

For a deeper understanding of China's dedollarization efforts, you may find the following video insightful:

(China just Launched Full De-dollarization with $1.2 Trillion Dollar E-Yuan. Ends SWIFT!)

Thursday, April 17, 2025

The Currency Stalemate: How U.S. and China’s Rigid Stands Threaten Global Economic Balance

Trump’s Trade War
Peace For Taiwan Is Possible
The Last Age of War, The First Age of Peace: Lord Kalki, Prophecies, and the Path to Global Redemption

The Currency Stalemate: How U.S. and China’s Rigid Stands Threaten Global Economic Balance

The global financial system is caught in a quiet but profound tug-of-war. On one side is the United States, fiercely guarding the U.S. dollar’s status as the world’s dominant reserve currency. On the other is China, aggressively pushing for dedollarization without making the structural reforms necessary for the yuan to step into that role. Both nations are clinging to contradictory and ultimately self-defeating currency policies—and the rest of the world, especially the poorest countries, may pay the price.

The Dollar’s Double-Edged Sword

America has long benefited from the dollar’s position as the de facto global currency. It allows the U.S. to borrow at lower costs, run massive deficits, and print money with relatively low inflationary consequences. More than military might, diplomacy, or even GDP, this financial supremacy is the cornerstone of American global power.

But this “exorbitant privilege” comes with an economic trade-off: chronic trade deficits. When you export your currency—because the world needs dollars for trade and reserves—you inevitably import goods and services. This structural imbalance has hollowed out parts of U.S. industry and fueled political backlash, even as it underwrites the global financial system.

China’s Currency Conundrum

Meanwhile, China aspires to chip away at dollar dominance. Through initiatives like the Cross-Border Interbank Payment System (CIPS), the digital yuan, and trade deals settled in renminbi (RMB), Beijing is laying the groundwork for a multipolar currency world. But there’s a fundamental contradiction at the heart of China’s ambition: the yuan is not fully convertible.

Capital controls remain tight. The value of the yuan is managed, often kept artificially low to favor exports—a cornerstone of China’s economic rise. But this very strategy undermines global trust in the yuan as a freely usable international currency. Until China opens its capital account and allows the market to determine the RMB’s value, its global aspirations will remain largely symbolic.

The Global Impasse

What we’re witnessing is a global currency system trapped by two immovable giants:

The U.S. won’t sacrifice dollar dominance, even though it leads to unsustainable trade imbalances and financial vulnerabilities.
China won’t liberalize the yuan, even though it limits the currency’s international reach and credibility.

This stalemate creates volatility in emerging markets, limits monetary policy options for poorer countries, and perpetuates an unstable, lopsided global order. In a world increasingly marked by regional blocs and shifting trade alliances, this rigidity does not serve the interests of global stability.

A Call for Reform

If neither Washington nor Beijing is willing to move, perhaps it’s time for the rest of the world—especially the Global South—to push for a more balanced system. This could include:

Expanded use of Special Drawing Rights (SDRs) through the IMF.
Regional currency unions.
Multilateral payment systems independent of dollar or yuan hegemony.
A diversified reserve currency basket, rather than a single dominant currency.

The world is overdue for a new currency architecture—one that reflects a more multipolar, interconnected, and equitable global economy. But until the U.S. relinquishes some control and China embraces reform, the rest of the world remains caught in a financial no-man’s-land.

And that’s a recipe for continued instability—especially for those with the least margin for error.

Trump’s Trade War
Peace For Taiwan Is Possible
The Last Age of War, The First Age of Peace: Lord Kalki, Prophecies, and the Path to Global Redemption

AI-Era Social Network: Reimagined for Truth, Trust & Transformation
Game Theory and the U.S.-China Trade War: Who Blinks First?
China's Dedollarization Drive: A New Era of Currency Competition
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Manufacturing the Future: Why America’s Tech Revolution Must Begin at Home
AOC 2028?

Why an AI Chatbot on Your Website Is the Perfect First Step into Business AI
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The AI Revolution: How Emerging Trends Are Empowering Small and Medium-Sized Businesses

China's Dedollarization Drive: A New Era of Currency Competition

Trump’s Trade War
Peace For Taiwan Is Possible
The Last Age of War, The First Age of Peace: Lord Kalki, Prophecies, and the Path to Global Redemption

China's Dedollarization Drive: A New Era of Currency Competition

The global financial landscape is undergoing a significant transformation as China intensifies its efforts to reduce reliance on the U.S. dollar—a process known as dedollarization. This movement is not solely about replacing the dollar but about reshaping international trade, finance, and geopolitical influence.

China's Dedollarization Strategy

China's dedollarization approach is multifaceted, aiming to:

Promote the Renminbi (RMB) in Global Trade: China is encouraging the use of its currency in international transactions, particularly with countries in the ASEAN region. In 2024, cross-border RMB settlements in ASEAN exceeded 5.8 trillion yuan, marking a 120% increase from 2021.
Develop Alternative Financial Systems: To reduce dependence on U.S.-dominated systems like SWIFT, China has established the Cross-Border Interbank Payment System (CIPS), facilitating RMB-denominated transactions.
Expand the Digital Yuan (e-CNY): China's central bank digital currency (CBDC) has seen substantial growth, with over 7 trillion yuan ($986 billion) in transactions by mid-2024. The digital yuan aims to enhance the RMB's global reach and offer an alternative to dollar-based digital payments.

Progress and Challenges

While China's dedollarization efforts have gained momentum, several challenges persist:

Limited Global Adoption: Despite growth, the RMB's share in global payments remains modest. As of 2023, it accounted for 4.3% of global payments, surpassing the Japanese yen but still trailing behind the U.S. dollar (47%) and the euro (23%).
Capital Controls: China's strict capital controls hinder the RMB's liquidity and its potential as a global reserve currency.
Trust and Transparency: Global investors often express concerns about China's regulatory environment and the transparency of its financial systems, which can deter widespread adoption of the RMB.

The Role of BRICS

The BRICS nations—Brazil, Russia, India, China, and South Africa—are collectively exploring dedollarization strategies:

BRICS Pay: An initiative to develop a decentralized payment system facilitating transactions in local currencies, aiming to reduce reliance on the U.S. dollar and SWIFT.
Petroyuan Discussions: Russia has proposed denominating oil trades in yuan, a move that could challenge the dollar's dominance in energy markets.
Common Currency Considerations: While discussions about a unified BRICS currency exist, significant economic disparities and differing monetary policies among member nations make this a complex endeavor.

A Multipolar Currency Future?

The global financial system is gradually shifting towards a more multipolar structure: Diversification of Reserves: Countries are increasingly diversifying their foreign exchange reserves, reducing the proportion held in U.S. dollars.

Emergence of Regional Currencies: Currencies like the euro and the RMB are gaining traction in regional trade agreements and financial transactions.
Technological Advancements: The rise of digital currencies and blockchain technology is facilitating alternative payment systems, potentially reducing the dominance of traditional currencies. While the U.S. dollar remains the predominant global reserve currency, these developments indicate a gradual move towards a more diversified and multipolar currency landscape.

In conclusion, China's dedollarization efforts, bolstered by technological innovations and strategic alliances like BRICS, are reshaping the global financial order. While the transition to a multipolar currency system will be gradual and complex, the foundations for such a shift are increasingly evident.

Trump’s Trade War
Peace For Taiwan Is Possible
The Last Age of War, The First Age of Peace: Lord Kalki, Prophecies, and the Path to Global Redemption

Saturday, April 05, 2025

Why the U.S. Has Trade Deficits (And Why That Might Be by Design)

Trump’s Trade War

Trump’s Trade War
Peace For Taiwan Is Possible

Trump’s Trade War

Why the U.S. Has Trade Deficits (And Why That Might Be by Design)

There’s a lot of hand-wringing about the United States’ persistent trade deficits. Politicians call it a problem. Economists debate it. And the public often hears it framed as a sign of weakness. But here’s a different perspective: maybe trade deficits aren’t a bug of the U.S. economic system—they’re a feature.

The Global Power of the U.S. Dollar

At the heart of this story is the U.S. dollar. For decades, it’s been the de facto global currency. Whether you're buying oil, investing in stocks, or settling international debts, chances are you're dealing in dollars. This gives the U.S. an enormous amount of financial power—and with it, some unusual consequences.

One of those consequences? The ability to print money—trillions of dollars' worth—and not suffer hyperinflation. Why? Because the world absorbs those dollars. Global trade, central banks, sovereign wealth funds, and corporations across the globe all demand dollars. When the U.S. prints more of them, a large portion doesn’t even stay in the U.S.—it gets soaked up abroad.

Printing Money Without Paying the Price

Most countries can’t get away with aggressive money printing. It would tank their currency, crash investor confidence, and lead to skyrocketing inflation. But the U.S. can. Because of the dollar’s privileged position, it can print and spend money freely—and other countries accept that money in exchange for real goods and services.

Think about that for a moment: the U.S. prints money, and in return, it gets cars from Japan, electronics from South Korea, textiles from Bangladesh, and oil from the Middle East. The dollars flow out, and products flow in. That’s a trade deficit in action. But it's also a sign of the dollar's overwhelming dominance.

You Can't Have It Both Ways

So here’s the dilemma: if the U.S. wants to keep the dollar as the world’s reserve currency and maintain loose monetary policy, it will inevitably run trade deficits. There’s no way around it. Dollars leave the country, goods and services flow in, and the U.S. consumes more than it produces. That’s the price of dollar dominance.

But what if the world wanted to fix this imbalance?

A Global Currency Alternative?

One option would be for major economies—say, the G7 plus BRICS—to come together and create a genuine global currency. It could be a basket of all major currencies, perhaps governed by an international institution. This would level the playing field and remove the "exorbitant privilege" the U.S. enjoys today.

Of course, don’t expect this to happen easily. Powerful interests in the U.S.—and politicians like Donald Trump—would be hyper-opposed to any such move. The current system gives the U.S. extraordinary leverage. Why would it willingly give that up?

The Bottom Line

If the U.S. wants to keep the dollar at the center of global finance and maintain its habit of aggressive money printing, then trade deficits are the inevitable result. You can’t have your cake and eat it too.

So the next time you hear someone complaining about the trade deficit, remember: it’s not just a problem—it’s also a choice.

Trump’s Trade War

Trump’s Trade War
Peace For Taiwan Is Possible

Trump’s Trade War

Wednesday, May 22, 2019

The Mighty Dollar

The starting point is the dollar’s status as a global reserve currency and international monetary standard, and the US current account deficit is the only mechanism through which the global supply of dollars can be increased. This is why a global economic boom often coincides with a higher US current account deficit, while global recessions often see the US current account moving in the opposite direction............ the expected surge in Chinese imports would almost close up America’s entire current account deficit and this would lead to a global dollar shortage. As a result, market forces would likely drive up the dollar to such a level where US exports to other parts of the world would be reduced, thus “re-creating” a trade or current account deficit. ...... In the end, either higher short rates or a stronger US dollar or both would act to slow down the US economy and ensure that America’s trade balance is more or less unchanged. ...... a Sino-US trade deal could simply amount to a zero-sum game in the short term: a gain for the US, a loss for the rest of the world, and indifference for China ..... a net efficiency loss in the world supply chains. ........ To avert or minimise the adverse impact of a China-US trade deal on the rest of the world economy, the Sino-US trade deal should focus on Beijing’s protective trade and investment policies rather than bilateral trade imbalance. The China-US trade imbalance is the natural result of global supply-chain evolution, and eliminating this imbalance is too disruptive for every country involved. ....... making sure that Beijing plays by the rules and levels off the playing field for foreign businesses and suppliers would represent a net gain for the world economy, benefiting all.

A US-China trade deal won’t be a win for global markets if Beijing shifts its trade surplus to other countries

A little good news could go a long way. If the US and China are shrewd enough, between them they can clinch recovery with a trade compromise that convinces investors that the future remains bright.

The world is taking leave of its senses and falling down the rabbit hole of a deepening global trade war, economic shocks and political instability. The post-war world order is breaking down, multilateralism is giving way to national self-interest and the political forums for peaceful debate are failing.......It’s time for someone to step forward and show stronger leadership before the world sinks back to where the 2008 financial crisis left off. Right now, the world is in self-harm mode and deeply vulnerable.

Barackface

Pages

Tuesday, April 29, 2025

The Global Push for Dedollarization

🌍 The Global Push for Dedollarization

🔄 Bilateral Currency Agreements

📈 Emerging Currencies Gaining Traction

💻 Technological Advancements Driving Change

🇨🇳 China's Digital Yuan: A Strategic Move

⏳ Timeline and Outlook

Thursday, April 17, 2025

The Currency Stalemate: How U.S. and China’s Rigid Stands Threaten Global Economic Balance

The Dollar’s Double-Edged Sword

China’s Currency Conundrum

The Global Impasse

A Call for Reform

China's Dedollarization Drive: A New Era of Currency Competition

China's Dedollarization Drive: A New Era of Currency Competition

China's Dedollarization Strategy

Progress and Challenges

The Role of BRICS

A Multipolar Currency Future?

Saturday, April 05, 2025

Why the U.S. Has Trade Deficits (And Why That Might Be by Design)

Why the U.S. Has Trade Deficits (And Why That Might Be by Design)

The Global Power of the U.S. Dollar

Printing Money Without Paying the Price

You Can't Have It Both Ways

A Global Currency Alternative?

The Bottom Line

Wednesday, May 22, 2019

The Mighty Dollar