Yuan vs. Dollar: Global Currency Challenge | Arm Set Eternity


because of the status of the US dollar which is the main currency of world trade.sanctionsUS government economy It has a very high economic destructive power. because when the US Cut Russian banks and businesses from access to the US dollar. It is the same as cutting the financial artery that supplies the Russian army.

Previously, many people thought that Russia was fully prepared. By stockpiling up to $630 billion in international reserves, the United States and its allies took measures over the clouds that no one expected.

that is, the limitation does notRussian central bankForeign exchange transactions with financial institutions in the US and Europe, as a result, prevent Russia from taking advantage of its foreign reserves held in foreign currencies at all. Because they cannot withdraw money or sell foreign currency assets that they have.

whereCurrently, more than 70 percent of Russia’s international reserves are held in foreign currency deposits, bonds or other assets. The remaining 20 percent is gold preserved in the country.

The person who is most shocked by this is China, as China currently has six times more international reserves than Russia. But if there is a conflict between China and the United States one day, then the United States can issue measures to prevent China from using foreign currency reserves. It is the same as the accumulated for many decades, disappearing in the blink of an eye. Money cannot be taken out in times of crisis.

Some analysts believe that US nuclear weapons Will it become a boomerang to destroy the US dollar itself or not? It is destroying the credibility of holding the US dollar. make countries will start thinking of spreading the risk out of the US dollar

Whether adding other currencies in the reserve Switching to other currencies in international trade A favorite example would be that further trade between Russia and China will be done through the RMB currency. Like buying Chinese oil from Saudi Arabia, it will do.yuan More and more countries do this. would tremble to the US dollar.

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In this regard, I would like to separate two things. The first is the current yuan. I can’t see the direction that will shake the US dollar throne, butThe second thing is to look at the future like digital yuan. Many have begun to question whether it has the potential to challenge the US dollar. and Western sanctions

I think before the US Economic nuclear weapons will be used in this manner. The meeting was held to discuss intensely. At the meeting, someone would have raised the issue of the impact on the status.US dollar But I believe there will be two opinions at the meeting. which makes the United States Feel comfortable using this deadly weapon.

One is that there is currently no alternative to competing with the US dollar. as the world’s major currency Whether it’s gold, bitcoin or yuan, for the yuan The main reason that there is no way to compare with the United States is becauseThe yuan is not a freely exchangeable currency.

Because the Chinese government still controls the liberalization of capital accounts. and control the flow of money Because China is an export-oriented economy. And the Chinese government wants to keep the exchange rate stable.

Yuan vs. Dollar: Global Currency Challenge | Arm Set Eternity

two is Even if people don’t trust the US dollar Can people trust the Yuan? If the US could use the dollar as a weapon In the future, China can use the Yuan as a weapon as well. For countries that are allied with the United States However, I still choose the dollar before the yuan, of course. We have seen examples of when China is dissatisfied with Australia. China also puts heavy economic pressure on Australia.

“As for the people who want to choose China, there might be Russia, North Korea, Iran, Saudi Arabia. which combined economic strength cannot compete with the United States.”

Of course, from now on, many countries may try to diversify and reduce their holdings of the US dollar. in the reserve fund but in the short and medium term just reduce holding But it does not change the state of the US dollar. which remains the world’s number 1 major currency

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Another great piece that iseconomic nuclearof the western camp is Russian banks are banning SWIFT, the primary communication system used by commercial banks to conduct interbank financial transactions.

Therefore, cutting Russian banks from the SWIFT system would make it difficult for Russia to contact banks in other countries to do so.financial transactionsInternational.

Many argue that China has already tried to create an alternative system called CIPS (Cross-Border Interbank Payment System), but the fact is that transactions made through CIPS are still very small. It can be said that the transactions made via SWIFT in 1 day are more than the volume of transactions made via CIPS in 1 year.

The US government was still able to sanction commercial banks that chose to use the CIPS system to avoid Russian sanctions.

For example, it is All of China’s major commercial banks have strictly adhered to Western sanctions on Russia. Because they cannot risk sanctions or their access to the Western camp’s financial system is restricted.

resulting in the past Chinese banks that used to help find a way to circumvent sanctions on Iran or Russia There are only small banks, resulting in severe restrictions on the volume of transactions that can be made.

However, these are all games nowadays. but in the field of international political strategy Beginning to talk about the possibility ofdigital yuan The Chinese government’s new payment system will change these games.

Condorisa Rice, a former security adviser during the George Bush Jr. government. Even came out to comment that in the next war between the United States and China, the power of US economic sanctions. Against China, it may decline because of the digital yuan.

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There are at least three US studies that address this concern, including the US Treasury Department report. Report of the Committee of the Congress of Congress and the Hoover Institute report at Stanford University.

It concluded that China may create a digital currency payment system (CBDC) of various governments. This is a transaction that may not have to go through an intermediary, such as a commercial bank in the past. and may make it more difficult to impose US sanctions

However, this is still just beginning. We have yet to see a concrete picture of the new payment system at this level.digital yuanPrepare for domestic use And China still has to study and develop a lot of systems for international transactions.

But one of the problems for the People’s Bank of China from now on is that How to develop a system to avoid US sanctions? It is said that in the long term it will become a key policy question for the Chinese government.
Column looking at China, looking at Thailand
Dr. Arm Tangnirandorn
Director of the Center for Chinese Studies Institute of Asian Studies Chulalongkorn University
Lecturer in Law and International Economics
Faculty of Law Chulalongkorn University


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