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Today, with the deepening of multilateral trade agreements and regional economic cooperation, the future of the global monetary system is even more unpredictable.
With the drastic changes in the global economic map, a new trend is taking shape that shocks the world;
The dollar's position in international settlements seems to be collapsing, and it may no longer be the world's dominant currency in the future.
The development of this trend is like a picture of a ship in the sea trying to stabilize in a storm, but gradually losing its direction.
Here's an in-depth look at the context in which this phenomenon is happening, how it's changing, and how it could bring about a new global economic landscape.
First, we need to understand why the dollar's position as an international settlement currency is being challenged.
The U.S. dollar has long been widely accepted globally for its stability and the strength of the U.S. economy.
However, in recent years, due to the changes in US domestic and foreign policies and the reshuffling of global economic forces, some countries and regions have begun to look for alternatives to the US dollar.
For example, economies such as the European Union, China, and Russia are increasing the use of their own currencies in international trade in an attempt to reduce their dependence on the US dollar.
Looking at some of the major cities and regions in Europe, Asia, and the Middle East, we can see the reality of diversifying currency usage strategies.
In Paris and Frankfurt, the use of the euro has increased significantly, and these two financial centers are promoting the integration of financial markets in the eurozone to enhance the euro's position in international transactions.
In Tokyo and Beijing, local governments are reducing their dependence on the U.S. dollar through various currency swap agreements and the promotion of local currency settlements.
In particular, China has taken active steps to promote the internationalization of the renminbi.
Through the Belt and Road Initiative, China's trade and investment links with many countries have facilitated the cross-border use of the renminbi.
At the same time, the Middle East, especially Saudi Arabia, is gradually increasing its renminbi settlement of energy transactions with China, as evidenced by the data on transactions in Trias and Dubai.
This diversification of the use of currencies is not only a realignment of economic strategy, but also a reflection of the shift in the center of gravity of global power.
The weakening trend of the US dollar, if it continues, may lead to its status as a "second-rate currency" in the global economy.
This will have far-reaching implications for international trade, cross-border investment, and even global economic security.
Emerging-market countries may find more room to manoeuvre, while dollar-dependent economies may need to reassess their economic and fiscal policies.
While analyzing the changes in the status of the US dollar, we should also pay attention to the opportunities and challenges in this process.
For some economies, this is an opportunity to reduce the risk of external shocks and increase economic autonomy.
But for global markets, it can also mean higher exchange rate fluctuations and trade costs.
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-ENDS-
Text: Little Bee
Audit|Ancient Oasis, Thousand Trees